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A Closer Look at the SEC’s New Marketing Rule

On December 22nd, 2020, the SEC finalized the Modernized Marketing Rule, culminating a monumental shift in the way they will view advertisements and solicitations by investment advisers going forward. This landmark update – referred to simply as the “Marketing Rule” aims to create a more evergreen, consolidated set of guidelines for anyone subject to the SEC’s jurisdiction.  

The Marketing Rule combines the Advertising Rule and the Solicitation Rule, which have been in existence since 1961 and 1979, respectively.  Since then, most of the updates to the interpretation of these rules have been made through “No-Action” letters. In finalizing the Marketing Rule, the SEC has set up a framework by which it will mostly supersede preceding guidelines to create a more comprehensive rule that includes updates to many of the interpretations to align with more modern, digital practices.

The new rule – aimed at simplifying and harmonizing guidelines – provides a unified solicitation and advertisement rule under a single regulatory framework. The finalized Marketing rule is expansive, but we’ve distilled it down to four of the most salient updates for programs and the potential implications for client engagement going forward 

  • The SEC aims to offer a clearer, and wider, definition of what constitutes an “advertisement,” thus allowing for a better understanding of what the rule covers.  The rule also includes exceptions for certain types of communications, which provides some relief for compliance professionals. This means more communications will fall under the definition of “advertisement”, and firms will need to adjust the way they supervise to accommodate a more nimble, yet broader approach.
  • Testimonials and endorsements will be allowed subject to certain conditions and disclosure requirements. While this is a step in the right direction, the restrictions placed around how testimonials and endorsements are presented will present challenges in implementation. For many firms, this is a long awaited development, but ensuring clear/prominent placement of the disclosures will probably be problematic.
  • The revised rule provides guidance on performance presentations, specifically updates around the use of gross/net of fees performance and “non-standard” performance (related, extracted, hypothetical, and predecessor performance). Most firms have historically stayed away from posting this type of performance in a public-facing setting, but the new rule provides a path forward for those that stay within the (considerable) boundaries.  
  • Lastly, the rule updates and modernizes record keeping mandates and Form ADV requirements to provide clients with better access to an advisor’s data. This will mean an Adviser will be subject to more intelligent broad-reaching scrutiny during SEC audits, further underscoring the need to prioritize their adherence to the applicable rules and regulations.

This is an important and much-needed step forward that will modernize how the financial industry approaches its marketing activities. While the SEC has provided firms ample runway to conform, it’s critical that firms start to assess the implications now to stay ahead of the curve. We can help – Hearsay’s Compliance Advisory Practice helps firms deliver against regulatory changes like the Marketing Rule. Our experienced team of compliance practitioners can help evaluate the rule, consult on the path forward and develop plans to optimize an approach. 

Learn more about our Hearsay Compliance Advisory Services and stay tuned for more insights as we dig deeper into the SEC’s new Marketing Rule.

MiFID II – Was muss ich tun?

Die Zeit läuft – ab Januar 2018 müssen sich Unternehmen aus dem Finanzbereich nach MiFID II, der überarbeiteten Fassung der „Markets in Financial Instruments Directive“, richten. Wir haben die Hintergründe von MiFID II bereits hier im Blog beschrieben und erläutert – jetzt helfen wir Ihnen, anhand von wichtigen Schritten in vier wichtigen Bereichen, die richtige Vorbereitung zu treffen:

1. Richtlinie und Schulungen

Artikel 16 und 45 der Richtlinie: Unternehmen müssen angemessene Personalschulungen anbieten, so dass Mitarbeiter die Regeln verstehen können. Darüber hinaus müssen Unternehmen ein Protokoll über die Kontrollen und Entwicklungen führen, die im Rahmen der Richtlinie durchgeführt werden. Das für die Richtlinien und Schulungen zuständige Team sollte Mitglieder aus den Bereichen Recht, Technik und Wirtschaft heranziehen, um die Mitarbeiter über die Unterschiede zwischen MiFID und MiFID II zu unterrichten.

2. Inhalt

Artikel 13 und 24 erfordern, dass die digitalen Marketinginhalte eines Unternehmens fair, eindeutig und nicht irreführend sind. Es wird dringend empfohlen, über eine entsprechende Technologie zu verfügen, um sicherzustellen, dass Unternehmen durch ihre Mitarbeiter ausschließlich überprüfte und genehmigte Inhalte verbreiten. Außerdem sieht Artikel 25 vor, dass Unternehmen die Bedürfnisse ihrer Kunden genau kennen um sicherstellen, um angemessene Produkt- oder Dienstleistungs-empfehlungen geben zu können – ein Bemühen, die mit Hilfe von geeigneter Compliance-Technologie bewältigt werden kann.

3. Überwachung

Nach Artikel 16 bedarf es eines soliden Überwachungssystems, durch welches sichergestellt wird, dass die digitale Kommunikation des Unternehmens mit Kunden immer angemessen und im besten Interesse des Kunden ist. Zuerst sollten Unternehmen die Erfassung ihrer aktuellen Daten bewerten und Ressourcen überwachen, um jeden Vorgang und jede technologische Lücke zu identifizieren. Unternehmen sollten Technologie berücksichtigen die verschiedene Arten der Überwachung zulassen, da alles abhängig von der Art des Inhaltes und des digitalen Kanals ist, da alles vor der Übermittlung genehmigt werden muss.

4. Buchführung

Schließlich sind Unternehmen in Übereinstimmung mit Artikel 6 und 69 verpflichtet, über jegliche elektronische Kommunikation, die über ein Endgerät läuft, Buch zu führen – einschließlich persönlicher Nachrichten, E-Mails und Textnachrichten – um sicherzustellen, dass die Offenlegung möglicher Interessenkonflikte entsprechend erfasst wird. Die Protokolle sollten leicht zugänglich sein und dem Kunden für einen Zeitraum von bis zu fünf Jahren und den Aufsichtsbehörden für einen Zeitraum von bis zu sieben Jahren zur Verfügung stehen. Es ist zudem wichtig, Kommunikation einheitlich zu erfassen, um zu vermeiden, dass im Rahmen der Überprüfung Kommunikation von verschiedenen Endgeräten einzeln zusammengefügt werden müssen.
 
Impressum: Das in diesem Artikel verfügbare Material dient ausschließlich zu Informationszwecken und stellt keine Rechtsberatung dar.
 
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New SEC Rules to Expand Disclosure Requirements for Advisors, Including Social Media

The U.S. Securities and Exchange Commission (SEC) continues to increase its oversight of investment advisors and asset managers. Last week, the SEC announced that it adopted amendments to the Investment Advisers Act that will increase the recordkeeping and reporting requirements for investment advisors. Advisors will now have to provide additional information on their separately managed account business, and other aspects of their business, including the use of social media.
According to the top securities regulator, Chair Mary Jo White, the SEC wants to have a better understanding of the risk profile of each advisor and the industry as a whole; therefore, there will be a series of rulemakings to enhance the SEC’s oversight of the asset management industry.
Starting October 1, 2017, not only will investment advisors need to report all their websites and social media accounts, including the addresses of each account, but also report their most current use case of these social media accounts and websites on Part 1A of the Form ADV. The burden is on the advisors to update their Forms every time their use case of social media and websites change.
These latest amendments are an expansion of last year’s amendment that only required social media account addresses to be included on the Form ADV.
The SEC will use this information for investment advisors exams. It also will compare all of the information that advisors disseminate across all of their public-facing social media accounts, as well as to identify and monitor new platforms.
Additionally, advisors must list all their social media accounts that are used to promote their business, including accounts that target investors outside of the U.S. However, if an account on a social media platform is used solely to promote the business of an affiliate or affiliates that are not advisors registered with the Commission, the account does not need to be disclosed on the Form ADV.
The information reported will only affect accounts that the advisors control, and not accounts where the advisor does not control its content (such as Yelp or Angie’s List). Employees that are not regulated also are exempt.
The SEC explains that these disclosure requirements  are not only helpful for investors but also help the Commission to improve its understanding of how advisors use social media to communicate with current and potential clients.
For investment advisory and asset management firms, it is now more crucial than ever to have the proper monitoring and recordkeeping tools in place to ensure proper oversight of information shared on social media by their advisors. They should revisit – and in many cases, increase – their oversight and compliance practices, including advertising and communication on social media. Not doing so could result in serious sanctions, as evidenced by the 13 advisory firms that were recently fined for spreading false advertising of product performance without verifying the information reported.

Tips for Asset Management Firms in France to Implement AMF’s Guidance on Social Media Usage

shutterstock_427841167Autorité des Marchés Financiers (“AMF”), the French regulator for financial markets, has recently updated its rules to clarify its policy on social media usage by asset management companies and debt securities issuers (“Regulated Firms’). The final ruling by AMF follows a recent consultation that was opened up to the public in October 2015, Hearsay Social participated in providing detailed comments to AMF. This ruling is also consistent with the approach taken by other EU regulatory bodies overseeing financial bodies.
Here are four tips for Regulated Firms in France to implement the regulatory requirements:
1. Policy and Training
Since Regulated Firms may be held liable for content that their employees post on social media on the firm’s behalf, Firms should implement a social media policy and train their employees on such policy. Here are key takeaways for a good social media policy:
Social media policies should be written in clear and concise language: A recommended route is to “state the rule” and then provide an illustrative example for the rule (e.g. acceptable tweet v. unacceptable tweet.
The social media policy should clearly define the consequences of breaking the policy, and designate roles and responsibilities within the firm identifying individuals for administering and enforcing the policy.
Each firm should review their policies and procedures on an ongoing basis for their adequacy and the effectiveness as new laws are implemented. Once the policy is laid out, employees should be trained on the policy.
Firms should consider having employees sign an attestation that they read and understand the policy on an annual basis.
2) Distinguishing between personal and business use
Whether a social media post is compliant depends on the content that is being used for professional purposes rather than being used for personal means. The AMF has therefore encouraged Regulated Firms to ensure that Firms have distinguished a separation between personal v. business use of social media. Here are some practical tips for ensuring these requirements are met:

  • Distinguish between a firm’s own social media accounts, and accounts for individual officers or employees at the firm. For the firm’s own accounts, there should be a clearly defined policy about who is permitted to post material, and with what level of review (before or after the postings).
  • Firms should clearly distinguish between allowing for their advisors to use business-related accounts for work versus their personal accounts. Companies typically bar the individual from discussing business communication on personal accounts.
  • Firms should monitor and retain content only on the individual’s business-related accounts or business related posts.

3) Content should be accurate, clear and not misleading
The AMF’s statement also reminded Firms to take appropriate action to ensure that all promotional material has content that is accurate, clear and not misleading. Firms must also take steps to ensure that any promotional materials should be identifiable as being marketing and advertising material, for example by using #pub or #publicité hashtags.
Businesses can apply this rule by having adequate systems in place so that all communications are monitored and supervised, for example, by having legal disclaimers for statements that are promotional in nature.
The rules also require that each business communication must be compliant when read as a collective message or by itself.  This rule is similar to the the FCA guidance in UK that requires all social media communication to have “standalone compliance.” This includes content that is shared on Facebook or retweeted on Twitter, even if the employee sharing the information is not the original source of the content.
To reduce this risk of liability, Regulated Firms should consider implementing systems for monitoring their employees business related communications on social media. Here are some practical steps to follow:

  • Implement a library of pre-approved content for timely dissemination that has been approved by appropriate people within the firm (e.g. compliance/legal);
  • Create an approval system/workflow for approving new or original content created by advisors; and
  • Ensure there is an appropriate monitoring system in place that will flag content that is non compliant.

4) Recordkeeping
The AMF reminded businesses that they should protect themselves from legal, regulatory and reputation risk by implementing appropriate archiving solutions for all business related communications. Additionally, businesses should adopt a policy and archive its business related communications, whether conducted through public or private messaging means.
Following the release of this guidance, firms operating in France should reevaluate their policies to ensure that their practices remain compliant. Digital channels like social media are a strategic enabler for businesses and adopting such mediums is not just a nice to have. However, the protection of consumers from misinformation and abuse is paramount and regulators’ focus on this is key. AMF’s latest ruling is a step in the right direction in encouraging innovation in the financial services industry while at the same time ensuring investor protection.
AMF’s ruling is in line with guidance released by the UK, U.S. and other countries. In the U.S., which was the first to formalize regulations around new channels like social media, the regulatory bodies (FINRA and SEC) do spot checks at financial firms to ensure compliance. We believe other countries will eventually follow suit and companies that prepare for this future will have a competitive advantage.
The clarifications apply to the following texts:
For asset management companies:

  • DOC-2011-24 on drafting CIS marketing materials and distributing CISs; and
  • DOC-2012-19 on drafting a programme of operations for asset management companies and self-managed collective investments   

For issuers of structured debt securities:

  • DOC-2013-13 on drafting marketing materials for the sale of structured debt securities.

If you have any comments or questions, please contact us at EUcompliance@hearsaysocial.com

Hearsay Social Continues to Demonstrate Innovation by Obtaining Third Patent

shutterstock_403185298The team here at Hearsay Social works tirelessly to uncover and develop brand-new ways for technology to improve the lives of our customers and today, I’m both humbled and excited to announce that we’ve been granted our third patent, this time for inventing a unique single sign-on (SSO) technology for our enterprise social media management platform.
The technology integrates multiple social networks and systems so that users of our platform can access various networks, including Facebook, LinkedIn and Twitter, using a single log in. We implemented this technology because our customers maintain their own internal systems to manage the people in their organization, and we wanted to give them the flexibility and control to decide how and when to grant them access to the platform we’ve built.
For our enterprise customers (which includes eight of the top 10 global financial services firms!), this is a significant efficiency gain for their financial advisors and insurance agents who rely on social media for business and to compliantly reach out and connect with customers and prospects.
At Hearsay Social, we’re always looking for new, innovative ways to make the Hearsay experience as easy and seamless as possible. This new patent demonstrates how we’re pushing the boundaries for what’s possible and, last but not least, truly putting the customer first, which is a core value shared across the entire company. Kudos to the team and I look forward to more inventions in the future!
For more details on the new patent, see our press release.
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New Facebook Advertising Solution Enables Corporate Marketers to Harness Proven Effectiveness of Local Ads

HSS-Corporate-to-Local-AdvertisingI’m excited to announce that Hearsay Social’s newest feature, Corporate-to-local Advertising for Facebook, launched today. Built from the ground up, this new functionality will help make Facebook advertising so much more easier and effective for our customers.
Here at Hearsay Social, we pride ourselves on our laser focus to help our enterprise customers leverage social and digital to drive business at the field level. And the value and power of hyper-targeted, local Facebook advertising has become increasingly clear. Consumers want to hear from and learn about businesses that aren’t just relevant to them, but are also accessible so that when they’re ready to buy, the experience is easy, local and convenient. This consumer buying journey is especially relevant to financial services, since ultimately an advisor’s or agent’s business is built on highly personal – and usually local – relationships.
Given that so many consumers are spending time on social media, networks like Facebook present a huge opportunity for advisors and agents to attract new local prospects, which is crucial to their business. But they don’t always have the time, trust, budget or know-how to capture those prospects using online advertising.
But corporate marketing teams at the firm level do have the expertise and budget for building and delivering great ad campaigns. What if organizations could use their existing advertising account and apply their marketing knowledge and budget to drive prospects directly to their local advisor or agent websites?
Our new Corporate-to-local Advertising feature does just that. It enables central marketing teams to leverage their marketing expertise to create, manage and optimize individualized Facebook ads for their field force … at scale. With just a few clicks, they can generate thousands of ads, each personalized with each advisor’s name, location and more, so that they have more in-market relevance while minimizing competitive bidding that can occur among advisors. Corporate marketers have the ability to centrally manage ad budgets while gaining full visibility into and access to manage local advertising campaigns – so that their advisors and agents can spend more time doing what they do best: servicing their clients.
To that end, I’m thrilled to share that American National, a leading insurance firm founded in 1905 with regional presences in all 50 states, has already seen impressive results from their Corporate-to-local Advertising program through Hearsay Social. The company has experienced 2,658 percent more traffic to their representatives’ local websites at a cost-per-click that’s 58 percent less than past Facebook advertising efforts that didn’t utilize Hearsay Social’s technology. Read more here.
This solution would not be what it is without the ongoing support and encouragement from our customers, many who have been with us from the very beginning of the initiative to help test, refine and pilot the technology and overall program – thank you!
Along with the rest of the Hearsay Social team, I look forward to adding new Corporate-to-local Advertising features and efficiencies, as well as expanding it to new social media platforms. Look out for more news in the coming months!
For more information, check out our press release.

Highlights from Hearsay Social London Customer Forum 2016 – Key Trends and Takeaways

Hearsay Social customers from across Europe gathered for the 2nd annual customer forum in London on June 16. The interactive forum — geared for customers to learn how to derive success from their social media programs — was filled with practical tips and insights on the most pressing questions concerning their programs today, including those related to product queries and requests, scaling the business, and measuring ROI.  
Slack for iOS Upload (1)
The afternoon opened with an address by Steve D’Angelo (@stephendangelo), global head of sales at Hearsay Social, and focused on major global trends shaping digital programs in the financial services industry. Steve thanked everyone for joining and and for their continued business. Steve stressed that this was their meeting and that they were free to ask any pressing topics that were on their minds concerning their programs. 
Below are some of the key trends and takeaways from the day’s event:

Industry Trends

Trend #1:  Communicate on your clients’ terms
Steve spoke about the changing preferences of the consumer in interacting with businesses.  Like other brands they are used to, customers expect their advisers to communicate on different channels with relevant and timely content, tailored to them. He emphasised the need to become a customer-centric organisation which goes beyond just having a single data view of the customer. The need to provide an omni-channel experience – where interactions move seamlessly between online and mobile SMS via phone and in-person – is increasingly important in this hyper-connected era. By being findable and available on multiple channels and platforms, the easier it is for customers to engage with you.
Trend #2:  Better connect marketing with relationship managers
Across our clients, there is no shortage of great content generated by marketing teams. But for that content to reach the right audience at the right time, firms need to leverage their front line salespeople – client advisers, relationship managers and agents. This not only ensures that marketing content gets amplified many times over, but it also creates a more personal relationship between the client or prospect and the advisor.
Trend #3: Get access to “dark data”
All companies collect and store dark data. Dark data is defined as operational data that is collected by firms but is currently not used by relationship managers in the field.  Steve emphasized the importance of this information for serving clients in an optimized way and improving the customer experience. For example, if a customer comes to your corporate website and then visits an advisor’s site, you should be able to have this data against the customer available to the advisor for timely and effective lead follow-up.  

Product Roadmap

Opening remarks was followed by an interactive session on our product roadmap led by Mark Gilbert (@Markegilbert), vp of products and Chris Andrew (@chriswandrew), managing director for Hearsay Europe. There was ample time for active discussion during the product session on how to enable agents/advisers to use Hearsay more often.
Scaling the program  
In one of the more interactive sessions presented by customers such as Thomas Rudelle (@ThomasRudelle ) ofAXA France, James McQueen (@McQueenUK) of Charles Derby (part of Old Mutual Wealth) and Liz Thompson of Aberdeen Asset Management, participants received practical tips for motivating and growing their social program. Some of the key takeaways on what makes for a successful program, included the following advice from Thomas:

  • Start small
  • Teach your Sales team to use social media through discussion forums, weekly meetings, and Facebook/LinkedIn groups
  • Engage in change management
  • Test and learn
  • Amplify and share adviser success stories, including through the use of regular video testimonials

Start small when measuring ROI
The day concluded with an informative discussion on how to measure ROI led by Hearsay Social’s Matthias Göllner (@goellnermat) and Andreea Costea of Allianz Romania. Matthias demystified ROI by presenting the Hearsay ROI framework mapped against the stage of digital maturity the customer is in – outlining a journey towards measurable ROI (see illustration below).
Screen Shot 2016-06-22 at 6.36.50 AM
Andreea showed the framework in action as she shared a recent case study based off of an online survey with advisers to understand the impact of social media on an adviser’s business.  Her presentation was full of practical tips on how to think about ROI, such as:

  • Leverage multi-dimensional views on ROI (NPS, agent success stories, agent survey)
  • Use the right measurement approach depending on the maturity of the program
  • Measure success early on in order to influence the actions and strategic direction of the project (e.g. agent training, social signals, Facebook ads)
  • Share successes in various ways (agent stories, best practices, leader boards for social)
  • Develop a community of agents on social media (e.g. Facebook group) to motivate them to actively share their success.  

Finally, a big thank you to everyone who took time out of their busy schedules to come for the annual customer forum in London.  Your engagement and dialog are the reason we strive to do better.  
Connect with us on Facebook, or visit Hearsaysocial.com for more information.
 

Clara Shih Discusses New Book "The Social Business Imperative" on DisrupTV

Screen Shot 2016-06-17 at 3.50.49 PMHearsay Social CEO and founder Clara Shih (@ClaraShih) today had the pleasure of being a guest on DisrupTV (@DisrupTVShow), a web series focused on leadership, innovation and disruption.
Co-hosted by R “Ray” Wang (@RWang0), principal analyst and founder of Constellation Research, and Vala Afshar (@ValaAfshar), chief digital evangelist at Salesforce.com, the show features candid, informal conversations with game changers in business, technology and media.
On the show, Clara shares the inspiration behind her newly released book, The Social Business Imperative: Adapting Your Business Model to the Always-Connected Consumer (including how she was able to accomplish writing it while on maternity leave). She also discusses:

  • Why social and digital have become too important and too strategic to delegate to a junior or siloed team; CEOs, boards and management teams must personally own and drive their companies’ digital strategy
  • How today’s customers want and expect to be able to engage with the brands they purchase from and how companies that do not leverage digital communication channels are at risk of being disintermediated
  • Examples of companies that are embracing Social Business


DisrupTV Episode 0020: Featuring Clara Shih, Naveen Rajdev & Alan Lepofsky 6.17.16 from Constellation Research on Vimeo.
Please ‘like’ the The Social Business Imperative Facebook Page to get the latest updates on book signings, appearances, updates and more. Also, be sure to follow #DisrupTV to stay informed on upcoming shows and guests!
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How Firms Will Reach Next-Gen Investors

shutterstock_156997538The way consumers interact with service providers—whether retail, health care or banking—has profoundly changed from just five years ago. Even in heavily regulated industries like financial services, digital disrupters have drastically altered the status quo, forcing companies to rethink traditional business models in light of new digital entrants and shifting client expectations. From robo advisors to new regulations, millennials to baby boomers, new developments are making clear that the ways of the past are no longer the keys to success in the future—or even today.
The urgent necessity of firms and their employees to adapt to the changing expectations of today’s always-connected consumer was a key theme at Hearsay Social’s recent Innovation Summit in San Francisco, which focused on the transformative changes taking place within the financial services and insurance sector, as well as the challenges and opportunities that lie ahead.
To stay relevant and succeed in the face of such profound changes, here are five things to keep in mind:

1. Financial technology is an evolution, not a revolution.

The phenomenon that is happening in financial services is an evolution, rather than a revolution, according to Naureen Hassan, the chief digital officer at Morgan Stanley, in her opening remarks on the future of wealth management. Amazon and Google have set the bar for what consumers now expect and demand. These new consumer expectations do not mean that traditional wealth management firms have to completely change course, but they need to evolve.
Consumer trends that started in retail are now clearly affecting regulated industries like financial services. For example, mobile now accounts for 21 percent of all transactions at Starbucks. Allowing customers to order via mobile before picking up their drink moves people through lines more quickly, but still allows for personalized customer experiences. Consumers expect to have access to certain information and activities through their phones, but that doesn’t mean that human interaction is going away. Leading financial firms are exploring similar practices and next-gen tools, and may look to retail leaders like Starbucks for ways to enhance customer experiences.

2. Skate where the puck is going.

This should come as no surprise, but following the money is always a good strategy. There is a lot of buzz in the industry about robo advisors and digital-direct financial products, but those channels only capture a small portion of invested assets. The 10 leading financial advisor channel firms still tout more than $13 trillion assets under management, compared to $250 billion for robo advisors. Focusing on capturing the generational transfer of wealth is a much bigger opportunity. As Chip Roame of Tiburon Strategic Advisors points out, baby boomers, who still hold the majority of America’s wealth, will liquidate some portion of the $59.4 trillion in retirement plans, personal assets and small businesses they currently control. A significant portion of this money will go to the current millennial generation, and getting in touch with them now is essential.

3. Know your next generation of clients.

Financial planners and advisors looking to reach this next group of investors need to know that millennials have already taken the mantle as the largest portion of the American population, and just last year became the biggest part of the American workforce. This is quickly creating a lot of new client opportunities, but firms will need a refined understanding of how to meet the unique needs of this growing demographic, as my co-founder and CEO of Hearsay Social Clara Shih has shared.
Moreover, what financial professionals may not know is that despite their digital dispositions, most millennials still crave face-to-face interaction with an advisor, just like their parents before them. However, millennials also expect those advisors to be digitally savvy. Having a strong online presence and communicating through a variety of digital channels is imperative. Digital technology is not just a disrupter, but also an enabler, opening doors for advisors to have the same human interactions with a younger generation.

4. Digital technology is not turn-key.

Simply opening new digital channels of communication for customers is not enough. You have to put in the effort to actually engage with customers where they want to interact. Kenneth Lin, founder and CEO at Credit Karma, demonstrated how his company conducts all customer interactions online, with no cold calls and no physical touchpoints. While this may not be the right approach for other financial services professionals, it certainly shows that communication will often originate online.
Today, customers expect to find and hear from you exactly when, where and how they prefer: on social media and mobile devices. Millennials are even more likely to share their experiences on social media. As a result, firms that fail to provide desired communication channels for their advisors to reach their clients—like text messaging—puts firms and advisors at risk of being left behind. Amitabh Jhawar, COO of Braintree, said his company uses social media data to inform risk modeling.

5. Financial services are being unbundled.

The primary driver of disruption in financial services is deconstruction of the one-size-fits-all product, according to Jon Sakoda, general partner at venture capital firm New Enterprise Associates. This unbundling allows new entrants to disrupt large incumbent firms by offering specialized, niche services at scale. To compete, traditional financial organizations must offer faster, more efficient services while playing to their “human” strengths. High tech but also high touch is how to win in today’s marketplace.
The undoubted winner in the digital evolution of financial services is the consumer, who will have a wider array of options at cheaper prices. If there are any losers, it will be those who fail to put forth the effort to arm themselves with digital technology to meet the needs of the always connected consumer.
This article originally appeared in Wealthmanagement.com. 
Follow the conversation at #HearsaySummit.

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How U.S. Advisors Can Drum Up Business by Texting [Infographic]

Considering 90 percent of text messages are read within three minutes of delivery, texting represents one of the most powerful communication channels today. For advisors and agents, it can be a powerful tool for converting prospects into clients and strengthening ties with existing clients to grow business.
Take a look at the following infographic for important stats on advisor-client text messaging, and the benefits that can’t be ignored.

Learn more about compliant-controlled text messaging for advisors.

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