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You Need a Proactive Regulatory Approach to Advisor Texting – Here's Why

Webinar Summary

“It’s only a matter of time before regulators go after companies that are outside of compliance.” This is one of the key takeaways from Mitch Avnet, of Compliance Risk Concepts, from our joint November 7th webinar ‘Designing a Proactive Regulatory Approach to Advisor Texting.’
While the above quote may be one of the most provocative, Avnet discusses several important aspects for compliance and supervision professionals to consider regarding text messaging for business.
Avnet notes that financial advisors are typically very client service oriented people. Because of this tendency, text messaging continues to be a very effective communications channel for advisors. Often, texting is the most effective way to confirm or schedule meetings, send birthday greetings, or just stay top of mind with their clients.
As text messaging continues to become more and more common in the industry, compliance and supervision teams have responded by having advisors regularly certify that they are not using text messaging that violate firm policies. While this certification is a good step, it’s not sufficient to mitigate the risk to your firm. As stated above, sooner or later, regulators will go after companies that are outside of compliance. Avnet goes on to say, “Firms can either design and enforce policies and procedures now, or they can expect to pay later.”
A proactive regulatory approach is recommended by Avnet as the best way to neutralize the risks of text messaging for financial advisors. Luckily, there are several compliant texting solutions on the market, including Hearsay Relate, to help compliance and supervision teams monitor text messaging without adding to their workload.
Another key point that Avnet mentions is the reasonableness standard for advisor texting. As new technologies become available that help compliance and supervision teams capture, retain, and monitor text messaging, regulators will begin to enforce regulations that apply to business text messaging.
Again, Avnet strongly believes in designing a proactive approach to these inevitable regulations as the best way to ensure that the risks associated with business text messaging are reduced. Teams should also begin by extending their electronic communications policies to include text messaging and begin monitoring and surveilling this emerging communication channel for financial advisors.
To learn more about designing a proactive regulatory approach to advisor texting, please click here to access the webinar recording.