Planner's Corner- Beware of Ghostwritten Articles

You've probably received the solicitation, and been tempted to purchase the beautiful book or glossy magazine, with your picture and name on the cover.  The solicitation promises instant credibility, because no client would know that you had nothing to do with writing the book, or that the magazine article is purchased.  These "ghostwritten" marketing efforts promise much, are extremely high quality, and as a result, are tempting.

Beware!  The Financial Industry Regulatory Authority (FINRA) warns that sales representatives for member firms should take care when using ghostwritten books and articles in marketing their services.   A rule established by the National Association of Securities Dealers (NASD)  "prohibits false, misleading or exaggerated communications with the public and the omission of material facts or qualifications that would cause a communication to be misleading," FINRA officials write in Regulatory Notice 08-27.   Many of the ghostwritten books, pamphlets and newspaper advice articles may violate that rule and other rules established by the NASD and FINRA's other predecessor organization, the regulatory arm of the New York Stock Exchange, the notice states.

FINRA member broker/ dealers must supervise the communications of registered representatives, and those representatives should disclose whether other individuals or entities have created publications for their use, according to the reports.   If a FINRA member firm pays for a publication, article or interview featuring a representative or a representative's byline on behalf of a respresentative, that communication must be clearly identified as an advertisement, the officials write. Finally, the authorship and subsidy disclosure rules apply to:

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  Pamphlets or hard-cover books about investment topics that can be bought with a representative's name printed on the cover;

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  Newspaper, magazine or Web articles that appear to be written by the representative;

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  Interview-style broadcasts, Webcasts or other public appearances where it appears that an independent third party is interviewing a representative when the interview questions and answers are, in fact, pre-determined, or, in the case of printed interviews, where the questions and answers were created by or for the representative;

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  Handouts paid for by the representative that look as if they are magazines containing articles written by or about the representative.

There is, apparently, no specific notice or rule specifically suggesting that insurance agents beware of ghostwritten marketing materials.  If, however, one views Chris Hansen's Dateline expose on aggressive agent tactics which aired in December 2007, which program followed widespread disclosure and discussion of misleading professional designations and titles in the insurance industry, ghostwritten materials were naturally included among other practices considered "deceptive" by the common person.

If that is not enough to cause you pause, imagine how much fun the trial lawyer representing your former client is going to have with your ghostwritten marketing materials, immediately following your unequivocal denial at making any statement or performing any act that was misleading or intending to deceive your clients.  Trial lawyers live for moments like the one you may be handing them (which may naturally lead to another moment they live for-- a hefty verdict for malpractice or fraud).    Suffice it to say, even if the Department of Insurance does not specifically prohibit the practice, you engage in the practice at your own risk.

And, no, this article was not "ghostwritten."