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When to look a gift horse in the mouth

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When the Denver Broncos played in the 2014 Super Bowl against the Seattle Seahawks at MefLife Stadium in New Jersey, Denver Mayor Michael Hancock was there—along with his mother and two staffers. It’s not surprising that the mayor of a city involved in such a big national event was present.

However, what was somewhat surprising to people in Denver was that Hancock accepted a $40,000 gift in the form of the Super Bowl trip, offered by the Metro Denver Sports Commission and funded by donors that included Comcast and two other current or past city contractors.

Under the city’s current ethics code, the gift was legal, although many questioned Hancock for accepting the trip given how it was funded. The situation recently led the city’s Board of Ethics looking into reforms to toughen up rules and close the loophole that allowed businesses to funnel payments for expensive trips like the Super Bowl junket through nonprofit groups.

No public official wants his name in the news due to an ethics issue, as the mere rumor of any impropriety can potentially be devastating to political career aspirations. This example serves as a reminder of the potential hazards involved in accepting gifts not just for public officials, but for people in the private sector as well—including insurance agents.

Accepting gifts, trips or incentives from insurance carriers or IMOs can have the appearance of hampering an agent’s objectivity when recommending certain carriers, products or services for clients.

It is always important to be as objective about product recommendations as possible. Whether you are a fiduciary or serve clients under the suitability standard of care, insurance and financial advisors have an obligation to consider the client’s interests first and to make recommendations without being biased or considering your own interests.

It’s hard to argue that accepting or earning incentives such as trips or expensive gifts has the potential to color the judgment of some weaker-minded agents. Suppose an agent is approaching the qualification level for an incentive trip to an exotic locale. He’s not there yet, and the deadline date for qualification is almost upon him. Is it unreasonable to think the agent might push a client toward a product from this company in order to hit the qualification mark as opposed to what might be even a slightly more suitable product from a source where the agent has no “extra” incentive for placing a policy?

It is important to note that some of these trips do actually offer professional value in the form of great speakers and sharing ideas with peers that can help you better serve your clients.

Beyond incentive trips, would something like accepting tickets to an arena suite at a professional playoff game from an IMO or carrier make you more likely to recommend its products over that of their competitors? Is this an ethical issue, or simply accepting a perk of the job as reward for a job already well done?

Guidance for situations such as this should be found in a company’s Code of Ethics or gift and hospitality policy. Your company has one of those, right?

A well-crafted policy should clearly outline the company’s position on gifts and hospitality, what constitutes gift-giving and hospitality and what is permissible and not permissible. The policy should be consistent with the company’s ethics program in encouraging high standards of honesty and integrity when it comes to decision-making and behavior.