Advisor groups fight for telemarketing exemption

(January 4, 2005) The federal government’s decision to move forward on establishing a do-not-call registry to cut down on telemarketing could have an effect on advisors who use such calls to build business. Advisor associations are hoping to get an exemption from the proposed rule.

In December, Ottawa introduced legislation to establish a do-not-call registry, similar to one established in the U.S. in 2003, which has attracted 65 million households. However, the Canadian legislation still has to be approved, public hearings must be scheduled, and the CRTC will likely be given the ultimate responsibility for setting up the registry, meaning the process could take at least a year.

Still, John Whaley, executive director of the Independent Financial Brokers of Canada (IFB), says his association will be following the progress of the legislation closely. “We support the idea of a do-not-call-list,” he says. The problem, he notes, is that Ottawa defines telemarketers as “anyone who calls anyone about business.”

“I think Canadians do want protection from the classic telemarketer, but I don’t think they mind their insurance agent calling every so often,” Whaley says.

Sara Gelgor, vice-president of regulatory affairs at Advocis, admits there is a demand from consumers to reduce nuisance telemarketing calls. “But that has to be balanced with the ability to carry on business,” she says, adding that Advocis will likely be participating in consultations at the CRTC level, if the legislation progresses.

“Our key concern is the ability to carry on business while respecting the need for privacy,” says Gelgor.

Advocis was involved in a somewhat similar situation in New Brunswick, when the provincial government proposed amendments to its securities legislation prohibiting all calls to residences, with no exemptions. “The intent of the legislation was to attempt to reduce boiler-room scams,” Gelgor explains. “The concern was that it was so sweeping that advisors would be precluded from calling their clients.” In the end, the legislation included an exemption for all registrants under the province’s Securities Act.

Calling existing clients is one thing, but the legislation would also capture so-called “cold calling,” a method commonly used by newcomers in the financial services industry.

The IFB has done some informal polling on cold calling and has discovered that most of its members make fewer than 10 calls a week, according to Whaley. “I don’t think the public perceives that as a nuisance, because they are calling to make an appointment; they are not calling to sell you something directly.”

“We think there should be a volume limit set to zone in on what a telemarketer is,” he suggests. “Our members, who do some cold calling, but not a lot, should be excluded.”

In fact, surveys suggest that cold calling as a method of generating new clients has been losing popularity in recent years. In the ADVISOR Group’s 2004 Annual Dollars & Sense Survey, only 7% of advisors said they used cold calling, placing the method well behind other business-building techniques, such as utilizing existing clients/contacts and referrals.

In the 2003 Dollars & Sense Survey, 10% of advisors cited cold calling or telemarketing as their primary source of generating new business, down from 16% the previous year.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com