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Monthly Archives: July 2014

What Financial Advisors Should Know About the 2014 Electronic Communications Compliance Report

What Financial Advisors Should Know About the 2014 Electronic Communications Compliance Report

For the past four years, Smarsh has released an Electronic Compliance Survey Report. The company, which offers a cloud-based archiving solution for financial advisors, has used the report to identify concerns and trends within the financial services industry.


Since compliance is a significant issue for financial advisors, there are several items from the latest report that anyone involved in this industry needs to know about:


Keeping Up With an Increased Number of Communication Channels


Over the past three years, the number of electronic channels that firms allow their employees to use for messaging has nearly doubled. However, compliance programs have not expanded at the same rate. Archiving is seeing similar growth with comparable lack of management. While more messaging channels are being archived, most firms don’t have a comprehensive archiving strategy in place.


In terms of what’s being requested, LinkedIn, instant messaging, text messaging, and Twitter are at the top of the list. Since the report found that compliance officers don’t expect the resources dedicated to this type of messaging to expand much over the next year, those in charge of compliance are looking for technical solutions that can help them stay on top of everything that requires management.


Text Messaging: Popular, But Often Lacking Oversight


You wouldn’t have to go far back to find a time when people laughed at the idea of using text messages for business purposes. But now that the majority of the population sends text messages on a daily basis, and it’s usually possible to send more than 140 characters at a time, a lot of people have become comfortable with the idea of using text messages for business reasons.


Currently, over 40% of financial advisors use text messaging to communicate with clients. While that percentage is likely to continue growing, both retention and oversight solutions are lagging far behind. In order for this issue to be properly addressed, firms need solutions that will allow them to correlate data from text messages in a way that will enable them to be integrated into risk-based surveillance programs.


Producing Data is Still a Challenge


53% of the registered investment advisors surveyed for this report said that they had concerns about their ability to produce data if it’s requested of them. 29% of BDs had the same concern. When both groups were asked about what specifically worried them about this issue, both said that it’s increased scrutiny/enforcement by regulators.


Since this is a topic that’s on the mind of many advisors, it’s worth knowing what the SEC has asked firms to produce during recent examinations.. In order of most requested first, the SEC asked for email, website pages, instant messages, Bloomberg/Reuters messages, social media, email marketing, and text/SMS messages.


While most firms are still facing challenges in terms of closing compliance gaps, this report does reinforce the need for financial advisors to understand how to effectively communicate through digital channels.

New Florida Law Enables Financial Planners to Provide Insurance Advice Without Any Affiliations

New Florida Law Enables Financial Planners to Provide Insurance Advice Without Any Affiliations

Recently, a new law was passed in Florida that allows financial planners to talk to clients about insurance coverage without obtaining an affiliation to an insurance provider.


The law, which went into effect on the first of July, created a new kind of insurance license specifically for unaffiliated financial advisors. Prior to this law, a Florida advisor had to be appointed by an insurance company in order to advise clients on this topic.  Planners who charged a flat fee for their services were required to become affiliated with an insurance company as a sales person.


Thanks to this new law, planners who don’t have any intention of selling insurance can legally provide clients with the advice they need or request. For fee-only financial planners, this change allows them to avoid the conflict of representing an insurance company as a sales person and yet calling themselves fee-only.  This conflict brought them into non-compliance with the rules set down by the Certified Financial Planner Board of Standards for fee-only planners.


How Did This Law Come to Be?


A big part of why this law successfully made it through the state’s legislature is thanks to a lot of hard work from the Financial Planning Association of Florida. Since planners want to be in compliance with both state law and all applicable rules, this new legislation makes that possible.


As the Financial Planning Association’s chairman explained, “this is a huge gain for fee-only planners in Florida because they can now practice in a fee-only model with an insurance license that doesn’t potentially jeopardize their fee-only status with the CFP Board.”


Other Important Considerations About the Law


Although it’s easy to see why this law had a lot of support, it is important to be aware of the other effects it may have. As the FPA’s president explained, “it makes the public feel that someone who is an unaffiliated insurance adviser has the same level of education and training as a licensed insurance agent. That’s simply not the case.”


One result of the new law is that financial planners will need to take the initiative to fully educate themselves on insurance matters. While that will require extra work and unaffiliated planners won’t necessarily have the same direct access, it is still possible for them to provide the best possible advice to their clients. In fact, not having anything to sell means that the advice won’t suffer from the same bias as it would coming from someone who has a clear financial incentive to promote a specific insurance company.


Since some states don’t have a requirement for insurance licenses, this issue isn’t something that’s been raised. However, after the successful passage in Florida, it may not be long before it is addressed in other states like Illinois where licenses do currently play a role.

People in Need of Financial Advisors are Finding Them Via Search Engines

People in Need of Financial Advisors are Finding Them Via Search Engines

It wasn’t that long ago when people turned to the phone book for information on some kind of general service. And when they were in need of a more specialized service like financial advice, they turned to a friend, family member, or co-worker for a recommendation. While some people still use the phone book and plenty of people still ask for recommendations, these are no longer the only two options for finding a financial advisor.


Since most people always have a cell phone in their pocket, they have access to the Internet almost all of the time. So whether they’re sitting in front of a computer or simply walking through a store, they can search Google or Bing in a matter of seconds. Because the Internet is so convenient, a significant percentage of the population defaults to online searches whenever they’re in need of something.


How Online Searches Have Changed the Referral Process

Thanks to the availability of the Internet, research behavior has changed in two significant ways. First, some people may prefer to use email or social media to ask multiple people for recommendations. That gives them more options to evaluate, as well as shortening the amount of time that it takes to get a response.


Second, many people skip the process of posting a question and go right to a search engine. What this means is if your site doesn’t show up when someone types in a relevant search, the odds of your doing business with that potential customer are very slim.


No-Nonsense SEO Advice for Your Financial Planner Website

If you’ve ever Googled for search engine optimization, you may have felt like you were falling down a black hole. Not only is there a seemingly endless amount of information to digest, but a lot of it is outdated or downright incorrect. Since trying to make sense of all this SEO information can make you feel like you’re banging your head against a brick wall, the good news is you can focus your attention on just a few simple but effective ways to improve your search engine visibility.


The first tip is to include the name of the city you serve on your homepage. In fact, it’s good to have this information in your website’s headline. The second is to include the phone number and address of your business on every page of your site. You can place this information in your site’s header or footer.


The third tip is to include testimonials from customers on at least one page of your site. Since there may be several primary pages that most customers land on when they reach your site via a search engine, it can make sense to include testimonials on all of those pages.


Even though those three tips won’t take long to implement, they can make a significant difference when it comes to having strong search engine visibility and appearing credible to anyone who visits your website.