Con #1: The Sun MAY Come Up Tomorrow

November 21, 2012

The Great Recession, the weak recovery, 9/11, the weak state of print media, and other economic and world events have had an impact on my business, as they have on other businesses.

But the greatest threat to my business is government regulation – even though my industry is virtually unregulated.

The problem is that most of my clients are in the financial services industry.  As such, anything I write must go through “compliance.”  The compliance officer’s job is to ensure that the company does not get sued or fined, so if I were to write, for example, “The sun will come up tomorrow,” it would be changed to, “The sun may come up tomorrow,” since past performance is no guarantee of future performance.

The regulations are, in many cases, designed to protect investors from themselves.  Yet what they really do is create busy work for regulators and keep investors from receiving valuable information that would enable them to make informed investment decisions.  Consider a few real-life compliance requirements I’ve had to deal with:

  • Add my byline to ghostwritten articles.  This regulatory overreach resulted in my losing a Fortune 500 client.
  • Create a social media policy for a one-person firm.  I guess regulators want to make certain that my client won’t do anything she wouldn’t approve of.
  • Include compliance language in the body of press releases.  Compliance language accounted for more than half of the length of the quarterly press releases I sent out announcing a mutual fund’s performance.  As the compliance language increased, media interest in the press releases decreased.  No one wants to read legal language.
  • Write columns that never mention mutual funds … for a client who invests only in mutual funds.  Sometimes the compliance language is so burdensome, I end up not writing about certain topics.
  • Not publicize that my client is looking for money.  Start-ups with great technology need money to build their business.  Yet regulations typically prevent them from mentioning that fact when they publicize their technology.

Sometimes the compliance officers even go beyond the scope of the law.I once had a compliance officer for a Fortune 500 company tell me I had to add footnotes to bylined articles that were being submitted to newspapers.Ever see footnotes in your local newspaper?The same compliance officer also told me that any article submitted for publication had to be published without change.Fortunately, he was overruled by my client.

The advertising side of Kowal Communications is also affected by regulatory overreach.  In one case, I was planning a photo shoot for a real estate client and there was some concern about the client being sued if we did not have minority representation in the photo.  I contacted the U.S. Department of Housing and Urban Affairs to ask which minority groups had to be represented.  The answer – all of them.

How could I identify every minority group in the community?  And, even if we could find appropriate models for each group, how could I fit them all into a quarter-page ad?  Instead, the ad, the company’s Web site and all other marketing materials excluded people from all photos.

President Obama recently said that all businesses owe their success to the government (see his “you didn’t build that” speech on YouTube).  In many cases, it would be more accurate to say that owners built their businesses in spite of the government.


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