Financial providers and advisors need to have multiple sets of eyes to pay attention to all of the outside factors which affect their operation.
Obviously, the stock market is a key consideration, and is probably where many advisors first turn when they begin their day. Taking note of the national and international events of the previous day or the day ahead is probably a good idea, since many financial and investment markets are affected by global and political occurrences.
But financial firms also need to keep a watchful eye on federal regulations. They obviously affect almost every function advisors and providers perform, and they change (or threaten to change) regularly.
One regulation that is undergoing frequent revision is the rules regarding electronic communication between advisors and clients, most specifically in terms of the ability to text. As happens often, the government runs a bit behind the rest of the world in terms of innovation, and although texting has been a part of our lives for many years now, the government is catching up to what is possible and why it matters to investors and advisors.
It matters, because investors are regular human beings who like to text. When they want to communicate with their advisor, the first thought for many investors is to send that advisor a text. But they need to know it is OK to do so, and it is up to the advisor or financial provider to make their clients understand the federal regulations regarding text communications.
In April, FINRA released new definitions of acceptable texting functions by financial advisors, coming to the realization that investors and advisors both find texting to be the quickest way to communicate these days. The regulation concentrates mostly on record-keeping of texts, stating in regards to texts that if a company “intends to communicate, or permits its associated persons to communicate (by text), with regard to its business, it must first ensure that it can retain records of those communications as required” by established record-keeping rules.
What this means to firms is that they must make sure they have set technical operations regarding record-keeping of texts.
In June, Morgan Stanley began allowing advisors to communicate with clients via text. But they reminded their advisers that conversations regarding financial transactions, financial plans or financial goals could not be conducted via text. What Morgan Stanley told advisors is that they can discuss meeting plans and topics, and they can also send out mass text messages when events of the world (like the recent North Korean discussions) can affect a majority of investors.
The other issue addressed by the FINRA statement in April is that financial advisors must consider the difference between personal and business communication by text. Again, FINRA is saying firms must decide how to address different topics with clients. Advisors likely will need either two phone numbers, one for business purposes and one for personal use, or make certain they limit texts with clients to strictly business.
Firms must make certain their advisors understand the compliance regulations and make clear those topics that must be avoided via text. That being said, there is more freedom today for advisors to communicate with investors via text, and since so many people today communicate via text more than any other form of communication, advisors need to let their clients know that texting is possible.
According to Spectrem research, texting between investors and advisors currently is not frequent, but much of that may be to reluctance upon advisors to accept texts as legally viable communication. In Spectrem’s study Using Social Media and Mobile Technology in Financial Decisions, 9 percent of Ultra High Net Worth advisors with a net worth between $5 million and $25 million have texted their advisor, Asked to put their interest in texting their advisor on a 0-to-100 scale, the UHNW investors placed it at 32.56, which indicates that there is an interest among some investors to be able to communicate with their advisor in this fashion.
The most important aspect of the texting discussion is to remember (as Spectrem research indicates) that many investors prefer to get financial information from talking to a professional over reading articles or watching informational videos. Of course, today the word “talking’’ means more than just verbal communication. People “talk’’ to others via texting all the time, and consider it to be the most direct form of communication in a busy world where phone calls often get sent to voice mail limbo.
Revisit your company’s behaviors regarding texting with clients. Make sure your record-keeping operations are up to date, make sure all advisors understand the regulations which still exist regarding the kinds of information that can be texted, and then let investors know that they can text their advisors when phone calls or emails seem too old-fashioned.