We have upgraded our LinkedIn integration following the release of LinkedIn’s new compliance module. Please ensure that all users at your firm reconnect to LinkedIn through the Presults Console with their login and password by:
Logging into Presults
Clicking “Connectors” on the left side of the screen
Clicking “+Add New” next to social media
Clicking “Connect LinkedIn Compliance” and sign into LinkedIn using their user name and password
Content marketing uses short-form and long-form articles, newsletters, videos, charts, graphs and other information to engage an audience with the goal of landing them as a client. By providing useful and interesting content, you can build trust with your audience and demonstrate your potential value as a financial advisor.
Why is content important? Having strong content on your website helps you to rank better on search engines. So when potential clients search for “financial advisor in [state]” or “financial advisors that specialize in estate planning,” your firm’s website can show up at the top of search rankings. Content also helps you stay engaged with your existing and potential clients.
Getting Started with Content Marketing. The possibilities within content marketing are vast! An easy place to start is with topics that are of interest to you. Your interest and excitement will translate to your audience. You should also pick a medium that you are comfortable with and can consistently produce. If you aren’t a strong writer, but enjoy being in front of a camera, a weekly short video series will be easier (and more enjoyable) for you to make than a weekly newsletter. If you like charts and graphs, you could create your own, or dissect and discuss interesting data that you find online. The most important things are to share content that you actually care about and to do it consistently. You can also leverage AI tools like ChatGPT to generate content ideas, outlines and first drafts of your content to help save you time.
Archive. Keep in mind that as a financial advisor your marketing is subject to the SEC’s New Marketing Rule (the Division of Examinations even released a Risk Alert on this last Fall!) and recordkeeping regulations. Be sure that you are keeping records of all of your marketing communications with your clients, including emails (like newsletters), texts, articles posted to your website and social media posts.
Contributor – Anne Harris, Head of Marketing, Presults
FINRA Rule 2010 was in the news this month when an Edward Jones advisor received a 15-month suspension and $15,000 fine for violating FINRA Rules 2010, 8210, and 4511.
So what is FINRA Rule 2010 and how do you stay in compliance?
FINRA Rule 2010 rule requires that “A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.”
Rule 2010 is purposefully broad and requires members to conduct themselves in an ethical manner in all business practices. The rule applies not only to a member’s behavior towards clients, but also applies to their relationship with FINRA. In 2015, FINRA found that advisors under investigation “each breached his fiduciary duty to those investors in misusing that fund’s assets” and also included in the ruling that the advisors provided misleading information to FINRA and failed to update their U4 form, in violation of FINRA Rule 2010 (1).
In another ruling, FINRA found that “associated persons may be held liable under FINRA Rule 2010 for any unethical, business-related conduct, regardless of whether it relates to securities or an associated person’s customers” (2). This definition goes back to a 1996 ruling in the case Vail v S.E.C. where the SEC upheld a ruling that Henry Vail “misappropriated funds from the Houston Young Professional Republicans Club” finding that this was “ business-related” conduct even if it did not involve securities (3).
Summary: Rule 2010 regulates all professional behavior, not just relationships with clients. This rule also applies to any business-related conduct as well as actions and behaviors towards regulators.
Contributor – Anne Harris, Head of Marketing, Presults
The SEC adopted new amendments last week that will remove and replace references to credit ratings from the existing exceptions in Rules 101 and 102 of Regulation M.
In conjunction with this rule, the SEC added a new records retention requirement for broker dealers with regards to the exception in Rule 101. In accordance with Regulation 17a-4, “broker-dealers would be required to preserve for a period of not less than three years, the first two years in an easily accessible place, the written probability of default determination made pursuant to proposed paragraph (c)(2)(i) of Rule 101.”
Per SEC Chair Gensler, “This adoption fulfills Congress’s wishes in the wake of the 2008 financial crisis, ensuring we don’t embed in our ruleset a reliance on credit ratings – and instead have appropriate alternative measures of creditworthiness.”
Read the full press release from the SEC here: https://www.sec.gov/news/press-release/2023-105
Find the final rule here: https://www.sec.gov/rules/final/2023/34-97657.pdf
Compliance may not be fun, but it can be easy. By investing the time now to set up a flexible and adaptive compliance system, you can save your team time and trouble in the future. Here are a few best practices to consider when establishing and maintaining your electronic recordkeeping compliance system.
It All Starts with the Manual
When it comes to keeping you and your firm compliant with SEC and FINRA regulations around recordkeeping, everything should start and end with your compliance manual. Documenting your compliance rules and practices has several advantages. When your rules are documented, you reduce confusion and you have a source of truth that employees can turn to when they have any questions or concerns. Having a compliance manual and conducting periodic training helps maintain accountability.
Archive
The first step is to ensure that employees are clear on which communication channels are approved and which are not approved. All known communication channels should fall into one bucket or the other – there shouldn’t be any communication channels that don’t appear on your list. If you ban WhatsApp, don’t assume that your employees will extrapolate that ban and apply it to Signal and Telegram. If you allow Twitter, make sure you have a clear policy on Mastadon as well.
Data Retention & Storage
In most cases your data will need to be stored for 5 years if you are a Registered Investment Advisor and the first two years in an easily accessible place (“easily accessible place” is vague, but electronic storage that can be easily searched, indexed, filtered, and reviewed is recommended). All written communications from both current AND prospective clients must be archived, so that includes any advertisements (email marketing, social media marketing, flyers, etc).
Test Your Systems
It’s not enough just to have compliance systems and processes in place, you need to ensure that the systems are capturing all expected client communications and that employees aren’t communicating outside of these channels. Schedule a time every month to log into your archiving system and make sure that it is capturing all of the information you are expecting – any changes to your website, all of your social media posts, any text messages and all of your emails. Test your reporting system to make sure it is capturing all of your reviews.
Review and Audit
Set a specific percentage of client communications that you randomly review (this percentage might vary by firm size, but aim for at least 10%), and be sure to review any flagged communications. Your compliance system should flag potentially non-compliant words in your communications, words like “guarantee” or “promise.” Schedule semi-annual practice audits so that you are ready for the real event.
Be honest about shortcomings!
SEC Chair Gary Gensler said, “If you mess up – and people do mess up sometimes – come in and talk to us, cooperate with our investigation, and remediate your misconduct.” The SEC has been true to their word, offering reduced fines (or even no fines) for companies that self-report and cooperate with the SEC on investigations.
Compliance Starts at the Top
Compliance is everyone’s responsibility. From interns to senior managers, everyone who is communicating with clients has a responsibility to archive their conversations. When leaders in your firm set a good example, it’s much easier for others to follow. By following compliance rules and admitting when there are shortcomings, you create a culture of honesty and accountability.
Compliance Starts Now
Start now! If you are overwhelmed and not sure how to get started, trust us, it’s much easier to start now and store messages now than it will be 6 months from trying to track down old messages.
Texting is the default communication method in 2023, but it is still a new frontier for financial advisors. The past few years have seen a transition from in-person meetings with financial advisors to video conferences through popular platforms like Zoom. The next big transition in communication between financial advisors and their clients will be a move from calls and emails to text messaging. According to Simple Texting, 70% of consumers opted in to receive texts from businesses in 2022, and 61% said that they want the ability to text the business back.
Text messaging is convenient and allows users to communicate in a brief, informal way that saves time. Rather than another email crowding your inbox or a phone call where both parties must be present at the same time, text messaging allows for on-demand communication at the user’s convenience. Everything from appointment confirmations to portfolio updates can be done via text, but how do you ensure the correspondence is safe and compliant?
Text messaging your clients comes with risks. In 2022, the SEC levied $1.1 billion in fines against financial firms because “firms’ employees routinely communicated about business matters using text messaging applications on their personal devices.” There are a number of steps you and your firm should take to comply with SEC and FINRA regulations. First, develop written policies and procedures around texting. Texting can take place on iMessage, WhatsApp, Telegram and Google Voice, just to name a few, so be sure to address all of the channels your employees are using. Once your policies are established, all employees must be trained and periodically updated.
Your firm can implement compliant client texting in a few ways. One way is to utilize a voice over Internet Protocol (VoIP) technology that easily integrates with compliant archiving software. Some compliance software, like Presults, offers a phone application that you can download from the app store and use to text just like you normally would. With this solution, you will need a new business phone number, but will be able to use your existing device to text with clients, so you won’t need a second device.
Here are a few tips to keep in mind when texting:
Always keep a security wall between your personal communications and your business communications. Having a separate phone number from your personal number protects your privacy in the event of an audit.
Include standard disclosures at the start of any new text message conversation. If you are using texting to advertise to your clients, be sure to include the option for clients to opt out of these types of communications.
Periodically test your security parameters, you should be using two-step authentication and encryption with all of your client communications.
The Takeaway:
Meet your clients where they are. Clients, and especially younger clients, expect that they can contact their financial advisor via text message. Texting opens your firm up to audit risks, so minimize that risk by having a policy in place, using the right tools to text message compliantly, and taking the effort to make sure your messages are being sent with robust security protocols. To learn more visit, presults.com.
SMS archiving refers to the process of saving and storing text messages (SMS) for future reference or compliance purposes. With the increasing reliance on SMS for communication, it has become important for businesses and organizations to implement SMS archiving solutions to ensure that they have a record of all their SMS communication. In this article, we will look at the reasons for SMS archiving and the various options available for SMS archiving.
Why is SMS archiving important?
There are several reasons why SMS archiving is important for businesses and organizations:
Compliance: In certain industries, businesses are required to keep a record of all communication for compliance purposes. This includes SMS communication or otherwise known as texting. SMS archiving ensures that businesses have a record of all SMS communication, which can be produced as evidence in case of any legal or regulatory issues.
Record-keeping: SMS archiving helps businesses and organizations keep a record of their communication for future reference. This can be useful in cases where there is a need to refer back to a specific SMS conversation or message.
Productivity: SMS archiving can help improve productivity by making it easier to search and retrieve specific SMS messages. This can save time and effort that would otherwise be spent trying to locate a specific SMS message.
Security: SMS archiving can help businesses and organizations protect their SMS communication from being lost or deleted. This is particularly important in cases where SMS communication contains sensitive or confidential information.
Options for SMS archiving
There are several options available for SMS archiving, which include:
Manual archiving: In this method, businesses and organizations manually save and store their SMS communication. This can be done by printing out the SMS messages or saving them as digital files on a computer or server.
SMS archiving software: There are several SMS archiving software solutions available in the market that allow businesses and organizations to automatically save and store their SMS communication. These solutions typically have features such as search and retrieval, data export, and data protection. One of the best solutions, Presults, proactively monitors and archives this data in real-time saving compliance teams hundreds of hours on the review process.
In conclusion, SMS archiving is an important process for businesses and organizations to ensure that they have a record of all their SMS communication. There are several options available for SMS archiving, including manual archiving and SMS archiving software. To learn more visit, presults.com.
Clients must trust their financial advisor for the advisor/client relationship to work. If you’re an advisor, that means handling your clients’ money responsibly, but in this day and age, it also means protecting your clients’ data. The problem is that keeping clients’ data secure isn’t always easy, and best practices are always evolving. Here’s how you can stay up to date on the best ways to protect and securely share data with clients.
What Data Must Advisors Protect?
Before we talk about protecting client data, we first need to take a step back and discuss what sort of data requires protection. Personally Identifiable Information (PII) is information, either sensitive or non-sensitive, that either on its own or in combination with other information, can be used to identify an individual. Social security numbers, driver’s licenses, and financial information are all examples of sensitive PII. Other types of PII are non-sensitive, but when used in conjunction with other data could also identify an individual. Date of birth, zip code, and place of birth are all examples of non-sensitive PII. Ideally, advisors will protect all PII, but sensitive PII is especially important to protect and should only ever be shared securely.
Sharing Files Securely
The nature of the financial advisory business requires the sharing of much PII and other sensitive information. Therefore, one of the hardest parts of protecting client data is figuring out how to send and receive data to and from clients. To make clients more amenable to any additional steps imposed by your cybersecurity policy, instead of framing cybersecurity as a regulatory requirement or a hassle, frame it as another aspect of your excellent customer service – something you want to go above and beyond on because you value securing the data of your clients.
1. End-to-End Encryption
One of the most common ways to protect data is through encryption. To send and receive sensitive information, you need encryption on both ends, which is called end-to-end encryption. This method of sharing data works so well because only the sender and receiver can decrypt the shared information and therefore are the only ones who can view the contents. While end-to-end encryption is a great option, it’s largest drawback has typically been that implementation is required on both ends, meaning that to share information with a client, that client must sign up for the encryption service. While not terribly difficult, this process may prove time consuming for the client.
Presults offers an innovative approach to this obstacle by utilizing a combination of auto-expiring pages and one-time verification codes that don’t require client registration.
2. Cloud Storage
Another option for sharing information with clients securely is through cloud storage. The point of storing documents on the cloud is to keep those documents from being stored on your computer’s hard drive (which is typically more vulnerable). The benefits of cloud storage extend beyond more securely sharing and protecting data. When documents are stored on the cloud you can access them from any device with an internet connection, which allows for easier collaboration on documents and eliminates the risk of losing documents if a specific computer is damaged, lost, or stolen.
3. Client Portal
The final option for securely sharing sensitive data with clients is a client portal. A client portal is a centralized, secure area where clients can login to view communications, reports, invoices, contracts, etc. A client portal is a great option from a customer service perspective since the burden on clients is minimal. The only downside is that not all portals allow for two-way communication, though some do. If you value two-way communication, you’ll therefore want to find an option that includes this offering.
Train Employees on Client Privacy
According to a report by the Financial Planning Association’s Research and Practice Institute, 44% of advisors say they don’t understand the risks and issues of cybersecurity. This is especially concerning considering that while 48% of data breaches were due to malicious or criminal attacks, a full 27% of data breaches were due to human error. Proper training is therefore necessary both to decrease the risk of human error, and to make it harder for hackers to take advantage of weaknesses in your cybersecurity. While education obviously can’t eliminate human error, it can help decrease the chances of it.
The proper training for you and your employees will depend on the various roles of those in the firm. Mandatory training should be required for everyone, which goes over the firm’s procedures for protecting client data. The reason why these procedures are necessary should also be included in the training. How do your procedures help limit the chances of a data breach? What would a data breach mean for the company? What would a data breach mean for the information and assets of clients?
Create a Plan for a Data Breach
No matter what precautions you implement or how well you educate your team, a data breach is still possible, which is why every firm should create a data breach emergency plan. Every plan will be unique, but should include the following: • Data recovery procedures • How you will notify clients of the breach • Procedures for compensating clients impacted by the breach.
For a more personalized plan, work with your IT team or IT consultant. The more quickly you can react to a data breach, the better, both for your firm and for your clients. Becoming aware of the breach quickly, notifying clients immediately, and communicating exactly how you will handle the data breach can help maintain clients’ trust in you and your firm.
Another option that may be worth considering is cybersecurity insurance. Depending on the specific plan, this type of insurance could help you cover costs related to data recovery and compensating clients.
The Takeaway
Advisors have a duty to their clients, and that includes doing their best to protect client data. Presults takes protecting client data seriously, which is why its unique software flags emails containing PII and keeps them from being sent out. Unlike most other email archiving systems on the market, which only notify you after PII has been sent out, Presults gives you the ability to proactively protect the valuable data of your clients.
In today’s digital world, banks and financial institutions must work harder than ever to protect the assets of clients. Since the 2008 financial crisis, regulatory change increased 500% and these changes have translated to increased spending of up to 60% on compliance. While modern technology makes it easier for bad actors to commit financial crimes, the good news is that banks and other financial institutions can also use technology to improve their financial programs.
What is AI and Machine Learning?
Artificial intelligence (AI) is technology that can replicate human-like behavior, such as learning, planning, and problem solving. Machine learning is a subset of AI, which takes data (typically massive amounts) and sorts through it to find patterns. Over time, machine learning becomes better and better at what it does (hence the “learning”).
AI and specifically machine learning, is becoming more common across many industries, and finance is no exception.
Across the industry, AI technology is being used to: • Improve data management • Reduce human error • Minimize false positives • Prevent fraud and money laundering
Improved Data Management
No matter which sector of the financial industry you work in, it’s almost guaranteed that you’re managing massive amounts of data. When you implement AI technology you bring all that data together. Patterns that previously may have been almost impossible to see now become clear.
Bringing together all your data and using AI technology to sort through it can show where people or processes struggle, but even more importantly it can help businesses understand why they’re struggling. The ability to add context to human data is the difference between a series of data points and behavioral data that can help you improve processes. For example, knowing that something comes up in a disclosure report is helpful, but highlighting common denominators appearing consistently in disclosure reports tells you far more.
The use of behavioral data is already common, but it’s implementation will likely only increase in the coming years. No matter the size of your organization, whether you’re looking for technology to improve operations, email archiving, or compliance, considering AI offerings that improve data management can help your organization save time and money.
Reducing Human Error
Human error costs regulated industries billions annually. Due to its complex and highly regulated nature, asset management is especially susceptible to issues of human error (and these errors can often be quite costly). While eliminating human error completely is impossible, increased use of machine learning and AI can help minimize it.
Compliance officers working in finance are required to handle massive amounts of data relating to everything from transactions to company operations. The amount of data is more than any human could review on their own, which is why capable technology is so necessary. While more data typically increases the chance of a human making a mistake, it generally decreases the chances of machine learning technology making a mistake, since the more data the technology has, the more it can “learn” and the better it can become.
Minimize False Positives
Arguably one of the most time-consuming aspects of compliance is addressing false positives. With rule-based alert systems the rate of false positives can be incredibly high since the system applies a rule across all situations and cannot take into account different circumstances or contexts.
Any time an alert is raised, a compliance officer must personally review it. False positives are therefore a waste of resources since the time and energy of the compliance officer must be redirected from other tasks to address the alert. Additionally, bringing in a compliance officer when not necessary opens the situation up to human error, which as discussed previously, is a major concern in regulated industries such as finance.
An excellent example of machine learning compliance in action is email review. A rule-based alert system will search outgoing emails for specific keywords and will typically flag many false positives, which a compliance officer must then review. In contrast, an AI-based technology can learn as it goes and over time will raise fewer false red flags.
Prevent Fraud and Money Laundering
Since machine learning can identify data points as unusual in different scenarios, as opposed to applying the same criteria across the board, it’s ideal for identifying fraud and money laundering activities. For example, credit card companies often notify cardholders when fraudulent activity is suspected on their card. If you have a credit card, you can probably attest to how much this fraud prevention technology has improved in recent years, with higher accuracy in identifying fraudulent activity. This increased accuracy is thanks in large part to machine learning technology since the more the technology can become familiar with patterns the better it can detect anomalies.
Technology that learns as it goes is especially necessary when it comes to fraud and money laundering, since those attempting to commit fraud or launder money are constantly adapting their tactics in response to new regulations. For example, anti-money-laundering (AML) policies require that transactions greater than $10,000 to sanctioned countries must be reported and analyzed. Many money launderers have become aware of this rule, and in order to avoid detection often keep transactions right below this $10,000 mark. Machine learning technology can learn and update its search criteria in response to this change. Instead of searching for transactions over a certain amount it can use multiple screening tools to stay ahead of money launderers and flag potentially fraudulent transactions, even if they fall below the $10,000 mark.
The Takeaway
AI and machine learning is becoming the norm in the industry and it’s not just the major players who can take advantage of its benefits. Organizations of any size can find technological resources to improve their compliance program. One such option is Presults, which offers AI-powered email archiving and compliance software to help improve the efficiency of your compliance program.
For advisors who have spent the majority of the last two years working in a fully or partially remote capacity, many of the benefits of working for a wirehouse may no longer outweigh the expenses and lack of flexibility. While branching out and building your own business comes with many perks, it’s also no easy task. In fact, almost 90% of financial advisors fail within the first three years. Here’s what you’ll want to know before you decide to branch out on your own.
1. What Services You’ll Offer and Your Revenue Model
First and foremost, you need a viable business plan. For example, many advisors dislike the minimum asset requirements common throughout the industry, but if your compensation is an AUM based fee, you may struggle to earn enough without minimums. This doesn’t mean you can’t work with a wider range of clients, it just means you may need to think outside of the box. Maybe you decide to offer three or four different services with different fee structures, which could allow you to work with a wider variety of clients while still maintaining a viable business.
One of the biggest benefits of branching out on your own is the flexibility that comes with it. If you have priorities that don’t align with the standard financial planning model, consider offering services or a revenue model that’s more aligned with your goals.
2.Focus on What Interests You
While there are plenty of valuable certifications and programs, if your only goal is adding letters to your name, you’re wasting your time. Instead, focus your education on an area that interests you. Most financial advisors have a niche that especially speaks to them. Yours may be anything from options trading to helping a client going through a divorce. If a designation is available within your area of interest, that’s great, but don’t limit your education to what’s covered by designations or certifications.
Especially when you’re starting out, throwing money at anything that may attract clients is hard to turn down, but at the end of the day, knowing your business inside and out will help more than an alphabet soup behind your name.
3.Who Your Target Client Is
It may sound counterintuitive but focusing your energy on a narrower client base is almost always better than casting a wide, generic net.
Defining a target client doesn’t mean you’re limited to someone who exactly fits your target, but it can help you make decisions about your services, marketing, branding, etc. For example, if your target client is a millennial doctor or lawyer, a speaking event with retired baby boomers probably isn’t the best use of your time.
You’ll want to consider your target clients’: • Age • Occupation • Income level • Life stage • Financial needs and priorities
4.How to Maintain Strong Relationships with Existing Clients
Finding new clients is one of the hardest parts of life as an independent advisor. Especially when you feel the pressure building to bring in new clients, you may find yourself putting all your energy there, to the detriment of your current clients.
Besides the fact that supporting your clients is part of the job of an advisor, and therefore the right thing to do, it’s also a good business strategy. The more satisfied your clients are, the more likely they are to recommend you to their friends or family members. Additionally, keeping an existing client is far cheaper than finding a new one.
Whether the client is one you’ve worked with for years who followed you to your new practice, or a brand-new client, one of the best ways to keep clients satisfied is to communicate. Older clients may wonder how the change will impact them, while newer clients may not have previous experience working with an advisor. No matter the circumstance, communicate expectations with clients, making sure to be as specific as possible.
Topics to discuss include: • How often will you meet? • How can they reach you outside of face-to-face meetings? • How quickly will you respond to clients? • How will you and your client handle market corrections?
5.What Realistic Expectations Look Like
Starting a financial planning practice is not easy. That doesn’t mean it’s not worth it, but the more realistic your expectations are upfront, the more likely you are to succeed.
First of all, it’s highly unlikely that all of your clients will follow you. People simply don’t enjoy change, and most major wirehouses make it easier for clients to stay than follow their current advisor. No matter how satisfied your clients seem, if you’re expecting all or even most of them to follow you, you’ll likely end up disappointed.
There are also income expectations to consider. Almost every new advisor will need to dip into savings for a while. To make sure you have enough, crunch the numbers using your most conservative estimates. How much do you expect you’ll need to take from savings, at most? Now add at least 25% more. While you should hope for the best, when you’re running your own business, you have to prepare for the worst. At the very least, knowing you have plenty of additional cushion can help you sleep easier.
Finally, you need to set realistic expectations on your time. The best way to do this is to focus your energies and figure out how to get the best return for time invested. A great way to do this is to track your time. While this itself may take a little extra time, knowing how and where you spend your time and how it is or is not converting clients is a great way to work more efficiently and effectively.
6. All the Hats You’ll Wear
When it comes to realistic expectations on time, you’ll also need to consider all the hats you’ll be wearing. Once you’re on your own it’s your responsibility to handle admin tasks, IT, marketing, and compliance.
While you may be working on a limited budget in the beginning, you’ll also need to be honest with yourself on what you can and cannot handle on your own. Is it worth saving a few dollars at the risk of being out of compliance? Once you begin making a profit is that money better spent going into your pocket or towards hiring someone to help with admin tasks? The key to answering questions like these is to keep the big picture in mind.
The Takeaway
Branching out on your own comes with plenty of benefits, but it’s not easy. If you’re considering starting your own advisory practice, you’ll want to spend as much time as possible preparing beforehand to give yourself the best possible chance for success.
One way to make life easier is with Presults automated email archiving, specifically designed to meet the compliance needs of Advisors.
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