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Financial Services Industry Joins the Texting Generation

As financial services firms continue to grapple with how to deliver the type of personalized, on-demand communication that investors prefer, texting is emerging as an increasingly critical way for advisors to communicate with clients.
Once simply banned due to compliance concerns, this channel is now becoming the new norm, and for good reason: It’s fast, effective and personal – all vital to building those long-term relationships that grow business.
Recent research and news reinforce this accelerated shift toward texting as an essential communication channel.

More People – Clients and Advisors Alike – are Texting

A July 2017 study by Salesforce, which was based on an online survey of 2,192 U.S.-based adults conducted in June by Harris Poll, found that accessibility is an important factor (cited by 68 percent of survey respondents) when choosing a financial advisor.
The report also found that 25 percent of the respondents say they communicate with their advisor via text. An even higher percentage of advisors report texting for business purposes: In a recent Hearsay survey of more than 2,500 advisors, 52 percent said they did so.
Then there’s an obvious generational trend with regard to the popularity of texting: In the Salesforce study, a much higher percentage of millennials (44 percent) say they communicate with advisors via text messages. With $30 trillion dollars in wealth transfer from baby boomers to millennials looming ahead, advisors who don’t – or aren’t able to – text will be at a huge disadvantage.

Fintech Startups and Institutions Embracing the Channel

Firms have begun working to make it easier for their clients to access advisors through their mobile phones and texting. For example, in late July, the robo-advice platform Betterment introduced a new text messaging feature that gives customers access to human financial experts through Betterment’s mobile app.
Using the app, customers can securely send Betterment’s team of financial experts any financial question at any time. The firm says the new feature expands on its commitment to deliver a personalized experience for customers.
A month earlier, Morgan Stanley Wealth Management announced it will enable Morgan Stanley advisors to text with clients.
Morgan Stanley says client texting is one of several initiatives it’s launching to align compliant financial advisor-client communications with the way people communicate today. It’s part of a comprehensive digital strategy designed to help financial advisors deepen and broaden their client relationships.
One of the earliest proponents of text messaging in the industry was Prudential Advisors, which foresaw texting as a crucial communication channel. But the firm understood that without a program and the right technology in place, advisors are prone to “go rogue” and text out of compliance. Their compliant texting initiative, which rolled out late last year, has been a great success and the firm is beginning to identify data-driven trends and best practices.
Read more about Prudential’s advisor-client texting program.

Regulatory Agencies Hone in on Potential Texting Infractions

Despite data that confirm texting is a common – and preferred – communication channel, many firms continue to maintain a “no texting” policy, essentially turning a blind eye. But with regulators paying more attention to advisor-client texting, this strategy will ultimately prove short-sighted.
In April 2017, the Financial Industry Regulatory Authority (FINRA) released new guidance on text messaging communications. In its Regulatory Notice 17-18, FINRA said if a firm intends to communicate or permit associated persons to communicate with clients via text messaging, “it must first ensure that it can retain records of those communications as required by SEA Rules 17-a3 and 17a-4 and FINRA Rule 4511.”
There’s no doubt that texting is becoming a preferred way to engage; the vast majority of text messages are opened, and 90 percent are read within three minutes. Compare this to the traditional ways that advisors often try to get in touch with clients and prospects – phone calls, voice mails, direct mail, etc. – and it’s clear that texting is the new imperative.
Perhaps most important, texting is precisely the type of VIP-level service that investors expect from their advisors.

Connie Sung Moyle

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