Remembering Full Disclosure


A friend of mine just bought a new car that was everything he and his wife wanted. Great style, great pickup, great technology, greatyou get the idea.

Imagine his surprise, then, when the salesman stopped these happy customers as they were pulling out of the dealership in their Great One, to deliver this word to the wise: “By the way, be sure to fill up with premium gasoline! The engine in this car doesnt take regular.”

Now, my friend is a gentle soul, but the word “throttle” quickly came to mind, and it had nothing to do with engines.

That rep had revealed information in his parting shot that may have influenced the purchase, had this information only been disclosed during the sales interview. What the rep did in not disclosing this information is bad business, and its also bad for business. You see, although the couple has decided to keep the car, theyre finished with the rep and the dealership. And theyre now busily passing the word about what happened, when, where and how.

Depending on how things go, this failure to disclose could turn into a big mess. As they say, short-term gain, long-term pain.

The insurance and financial services sector has similar stories about improper disclosure. They too, are individual vignettes of bad business practices recounted by one customer at a time. You never know how many of these stories there are compared to the number of exemplary disclosure incidents, because the word-of-mouth crowd doesnt bother much with statistics. They zero in on stories, feelings and long memories.

The masterminds in the financial industry surely have worked overtime to prepare “full disclosure” documents of every description. Legislators and regulators continually have piled on requirements to ensure fair and accurate sales materials and marketplace practices. Court decisions often have weighed heavily on the side of the consumers right to know. And industry associations have not been bashful about offering programs and materials that support best disclosure practices.

No doubt counterparts to that happen among auto dealerships, too. So, what is the problem? Why do we still hear tales of woe about people not being told the full story during the sales process? Perhaps the problem is not that all the efforts detailed above have failed, but rather that they have been forgotten.

It is too easy for a company, agency or association to put on a program on how to handle disclosure and then say, “Well, weve done that, lets move on to the next thing.”

After all, they do have a lot to do. Exactly how much time, effort, money, staff and planning should be allocated to this activity as compared to, say, account management, privacy and security, system upgrades, recruiting and all the rest?

Besides, organizations, big and small, are still made up of people, and people forget things. Meaning, a rep may have every intention of disclosing all vital facts to a client but may still somehow overlook something critical. It happens (as does intentional nondisclosure, unfortunately).

These realities always bring business leaders to the same point and the same suggested solution: “The distribution channels need more training and education.” Ill support that notion here, but would like to offer the following as well.

If they need more training and education, decide who is going to provide itand pay for it. Many insurance distributors today are independents, not captives, so they have a cost/benefit factor involved in attending such sessions. What can be done to help them make effective and productive decisions about this?

Is there some way you can make the disclosure simpler to explain and grasp than it now is? Many insurance contracts are quite complex. To provide full disclosure, the marketer needs to know and provide details. The variable annuity industry, with the support and participation of the National Association for Variable Annuities, Reston, Va., has taken leadership on helping to simplify this process concerning securities documents required by federal authorities. But what about the other segments of the industry? I know many firms have made progress here, but it is not universal.

What can be done to help reps and other distributors “remember” the best disclosure practices they have learned? Maybe try something different than the Monday morning blast. My health club has begun putting health tips in the oddest places you could imagineon the floor, on a mirror, on various walls, etc.and it keeps changing these locations. Funny thing is, people actually are reading them. Are there comparable surprising ways to reach your own distributors with disclosure tips and reminders?

Why not repeat the key disclosure items more than once? If customers hear them only once, they can easily forget. You dont want to bore with repetition, but you dont want bad word-of-mouth, either, so its good to seek balance on this.

Disclosure is a serious part of serious business. If done well, it supports positive word-of-mouth and business growth. Its worth remembering.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 3, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.