Booby traps have been a part of war for centuries. They involve the setting of lures that the enemy hopes will attract their opponent. When the soldier touches the lure, the hidden bomb or other device goes off, killing or maiming the unwary soldier.
Now here’s the thing about booby traps. The devices themselves are often simple. But the logic behind them is cunning. Case in point: in Vietnam, the Vietcong noticed that American soldiers liked to kick empty soda cans lying on the ground. Soon, they began leaving devices in cans so they exploded when kicked. Yet U.S. soldiers kept kicking cans.
Why discuss booby traps? Because I believe many advisors today engage in dangerous, noncompliant behavior that could blow up in their faces. Like the American troops in Vietnam, they kick the same cans down the path, even though the industry environment has changed. They keep committing the same lies, omissions and shortcuts. But the problem is, kicking those cans will likely trigger “explosions” today because regulators have much less tolerance for can-kickers.
What kind of booby traps am I talking about? There are four main types:
1. Solicitation traps in connection with advertising or other prospect solicitation techniques.
2. Disclosure traps regarding what you say and don’t say about your background and business.
3. Suitability traps made as you decide which product or products to recommend to a client.