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How Financial Advisor Marketing Can Incorporate the New SEC Rule (And Stay Compliant)

While it took some time – 60+ years or so – the SEC finally made some concessions for financial advisor marketing in its new Marketing Rule. This 430-page rule amends the Investment Advisors Act to allow financial advisors more leeway in how they display potential client relationships, particularly when it comes to social media

Social media is a powerful tool for any marketer, but its capabilities have been limited for financial advisors, resulting in many advisors minimizing their social media efforts or forgoing the platforms altogether to avoid possible issues with compliance officers. 

With this new rule, financial advisors can leverage the depth and reach of social media platforms such as Facebook, Instagram, LinkedIn, and Twitter to strengthen their online presence and brand, and also attract new clients. 

Keep reading to learn how financial advisors can take advantage of this new freedom while also staying compliant.


What Can (And Should) Financial Advisors Do?

Per this new rule, financial advisors are now able to share and promote client reviews and testimonials that appear on 3rd-party sites. Examples of popular sites include Yelp, Google My Business (GMB), Foursquare, Angie’s List, Trustpilot, and even directly on Facebook. 

That’s good news for financial advisors who have spent years serving their clients well and getting rave reviews, only to not be able to spend the social currency gained from such positive feedback. Consumers have always valued the opinion of their peers because it reduces their risk when they select new financial advisors - first time or replacement. 

Whether it comes during conversations among friends, colleagues, family or online reviews, the value remains the same. The SEC has now opened the door for financial advisors to take advantage of social media’s version of “word of mouth” advertising whereas that wasn’t even an option in the past. 

Recognizing the importance of this, the SEC states in the 430-page document, that “A number of surveys show that individuals predominantly find their current financial firm or financial professional from personal referrals by family, friends, or colleagues, rather than through advertisements.”

Now, financial advisors can use their own clients’ words to show their value and expertise in addition to  branding, digital marketing, and powerful content alone. This powerful combination of resources such as white papers, blog content, videos, infographics, and eBooks paired with the all-powerful client review, testimonial, or success story can be a game-changer for financial advisors and their overall digital marketing/social media strategies. 

In the absence of track records, testimonials and ratings are two of the ways financial advisors can show proof they are experts in their field.

Financial advisors should not be afraid to ask clients for reviews. While it’s not permitted to pay for a review, there is no rule against asking your clients to leave you an unbiased review on one of the 3rd party review sites.

In addition to featuring client reviews and testimonials on social media channels, financial advisors can now respond to comments left on those channels. Prior to this Marketing Rule change, financial advisors experienced the frustration of only being permitted to use social media as a one-way communication channel, rather than a place for conversations as it was intended to be used all along. 

The rule also opens the door to financial advisors who wish to comment on personal issues such as religious affiliation and personal interests. The same goes for reviews and testimonials on 3rd party sites. Prior to this rule, financial advisors had to refrain from responding to any review, regardless of its relevance or validity. Now that responding to reviews is permitted, advisors can now address the claims made in a given review, whether for or against them. 

And while it may be tempting to only respond to the negative, it’s considered a best practice to respond to all reviews. In addition to showing they are paying attention, it also provides validation to others reading the reviews. 

It pays to remember that the main audience isn’t the people writing the reviews, but rather those reading the reviews to learn more about a financial advisor and how they are perceived by current clients. When responding, it’s important to be mindful of compliance rules as well as to remain professional. At times, negative reviews can feel like a personal attack but need to be handled professionally at all times. The best way to offset a negative review is to bury it with positive reviews. Anyone can have a disgruntled client.

One common question is how financial advisors know what people are saying about them online. The simple answer is that financial advisors need to know what’s being said about them and/or their firm online at all times. Of course, that may seem like a tall order considering the internet is a pretty big place. 

That’s where online reputation monitoring tools come in. Reputation monitoring tools vary from free services all the way to professional firms that focus only on reputation monitoring and management. For basic reputation monitoring, financial advisors can take advantage of Google Alerts. 

This free service allows any Google user to set up alerts that get sent to them throughout the day whenever certain criteria are met and appear online. Note: It can take a while to find the right alerts for a specific financial advisor firm, given that too many broad parameters can result in large numbers of false hits, and too narrow can miss something critical. 

Getting back to the above-mentioned reputation monitoring companies – there are legitimate businesses that offer this service, but many that are less than legitimate. Unfortunately, there are even some companies that say they can remove negative comments for a brand or business in order to improve their online reputation. 

The trouble is, oftentimes these companies are the ones responsible for the errant or negative information being circulated. Be diligent before entering an agreement with companies that make outlandish claims and want to be paid in advance.


Tips for Staying Compliant

While this new rule opens up many opportunities for financial advisors in social media, it doesn’t give those advisors carte blanche when it comes to this type of marketing. Advisors are still expected to monitor and document all social media activity just as before.  

Also, it’s a good practice to consider any 3rd-party site’s legitimacy prior to sharing any reviews originating from that site. If it’s not one of the better-known and popular sites, that doesn’t automatically mean it’s not valid, only that it warrants a bit of due diligence on the part of the financial advisor before sharing. 

As always, financial advisors must consider and include any necessary or recommended disclosures when publishing or sharing anything on social media.

A compliance officer’s biggest concern could be a reviewer who has been coached to provide a very positive rating and an advisor who makes it sound like this is the experience of a typical client.  

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