Advisors Get Green Light to Text Clients

By Cyril Tuohy

Now that compliance and regulation have caught up, advisors across the industry are being given the green light to text clients.

Citing survey data, industry executives say they can no longer sit out opportunities presented via the text route.

“Texting is becoming the public’s communication channel of choice,” said Gregory J. Smith, senior vice president of supervision for independent broker-dealer Securities America, a subsidiary of Ladenburg Thalmann Financial Services.

Securities America, with more than 2,200 independent advisors, recently launched its FINRA-compliant texting framework around vendor CellTrust’s SL 2 app, Securities America said.

Merrill Lynch Wealth Management, with 15,000 advisors, adopted the SL 2 for BlackBerry app to date and time-stamp, log, track and archive texts for a program the company is rolling out this month and next.

“Texting is just our latest investment in building our state-of-the-art digital capabilities – so that we can serve our clients when, where and how they want,” said Andy Sieg, head of Merrill Lynch Wealth Management, in a news release.

Merrill Lynch policies governing email apply to text messaging and live training sessions for advisors are available twice a week, but employees are blocked from attaching pictures, documents and emojis to their text messages, a Merrill Lynch spokeswoman said via email.

Last month, broker-dealer and registered investment advisor Voya Financial Advisors launched a new service enhancing texting communications for its 2,000 advisors, Voya Financial said.

Just for the record, text and chat communications are being recorded with time and date stamps, and archived on a par with written and email communications in the wake of regulatory guidance issued by FINRA last April.

Speed Equals Money

Under FINRA’s Regulatory Notice 17-18 directive, every firm that “intends to communicate, or permit its associated persons to communicate,” through a text messaging app or chat services “must first ensure that it can retain records for those communications.”

SL 2 meets FINRA’s requirements, but individual firms at their discretion are free to go beyond FINRA and impose stricter policies about what advisors can text clients.

Advisors can’t execute a trade using text messaging, for example, but clients can text advisors about arranging a time and place to further discuss buying and selling positions or family financial planning.

“People are using text messages because the response is much faster and when you are talking about stocks, the difference could be millions of dollars,” said Sean Moshir, CEO of CellTrust, a company that develops enterprise mobile communications, compliance, enforcement, confidentiality and security platforms.

Email, for which FINRA and other regulators have issued guidance for several years, is too slow and no longer competes with texting through social media site or dedicated texting apps.

As mobile phones move in and out of range of cell towers, texts are the first messages processed through the network and texting has rapidly proved its worth as a reliable communications channel available 24/7 from anywhere.

Convenience Trumps All

Millennials for sure, but more and more baby boomers as well, seem increasingly partial to texting over email and voice mail channels, ushering in a post-email and telephone age.

“If you’re an advisor trying to work with millennials, Gen Y or X, you’ll find a strong preference for text communications,” said Dan Grote, a partner at Denver-based Latitude Financial Group, which took part in the testing phase of the Securities America texting program.

“Even baby boomers prefer to send a short, one-line text regarding trivial matters,” Grote said.

The discrete advantages of texting, as millions of users will attest, give the channel a leg up on regular email, encrypted enterprise-platform email and voice mail.

Hundreds of millions of texts every year emanate from people waiting for the bus, at corporate meetings, from within movie theaters and other unlikely places, like the bathroom.

In a 2014 survey of 1,635 respondents, 97 percent of smartphone owners used text messaging at least once during a 10-day study period in November 2014, according to the Pew Research Center, making texting the most widely used basic feature or application.

Texting platforms provide advisors with a “two-way engagement opportunity,” and allow advisors to remain top of mind for clients, which is why texting has emerged as a potent engagement channel for advisors, technology experts said.

“Personalization is key to building a relationship,” said Samantha Chow, senior life and annuity analyst with Aite Group, a consulting firm. “Merrill Lynch is certainly a leader in the use of mobile technology to support its customers, prospects, and advisors.”

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].