What Changes To The SEC Marketing Rule Mean For Reputation Management Success

The SEC Marketing Rule was amended on Dec 20, 2020, became effective May 4, 2021, and will be enforced by the SEC on Nov 4, 2022. The financial services industry is certainly aware of this change, but questions abound when it comes to helping financial professionals, marketing teams, and compliance understand ways they can use reviews and endorsements — and how online reviews will disrupt the industry.

Shane Closser.

By Shane Closser

Jun 22, 2022

6 min

The Investment Advisor Act of 1940 — which imposes a duty on investment advisers to act in their client's best interests, including an affirmative duty to disclose all conflicts of interest — hasn't significantly changed in the last 40 years, despite significant shifts in the landscape due to the rise of the internet and social media. Enter the New Marketing Rule: it ratifies the Advertising and Cash Solicitation Rules from the Investment Advisor Act, allowing financial professionals and firms to engage in reputation management strategies to address rising consumer expectations on transparency and consumer feedback.

The SEC Marketing Rule was amended on Dec 20, 2020, became effective May 4, 2021, and will be enforced by the SEC on Nov 4, 2022. By now, the financial services industry is certainly aware of this change, but questions abound when it comes to helping financial professionals, marketing teams, and compliance understand ways they can use reviews and endorsements — and how online reviews will disrupt the industry.

For a more detailed analysis of the new laws, please review the Morgan Lewis white paper "The SEC'S New Marketing Rule: Key Takeways For Advisors," or watch this video as Yext and Morgan Lewis address many of the top questions within the industry. Now, let's dive in.

Why will reviews disrupt the wealth industry?

Let's zoom out for a minute to truly understand the importance of reviews — and why they are poised to have a profound imact at this moment.

Several recent studies have cited that 90% of customers are influenced by reviews, and in our Yext research within financial services we found that 89% of customers go online to perform research. Additionally, 80% of customers felt reviews were "very important to their purchase journey."* Reviews are also an important trust signal for investors as it informs their purchase decisions. In fact, when consumers need information about a business, research shows that they will now turn to the internet rather than word of mouth recommendations.

It all adds up to one thing: reviews are the new referral when it comes to driving revenue. Below are important research facts to keep in mind:

  • 89% of customers go online to perform research

  • 80% of customers feel reviews are extremely important in informing their purchase decisions. This is the most important touchpoint outside of referrals from friends and face-to-face client interactions.

  • 73% of customers go to 7+ places to fact-check and inform their purchase decisions.*

But online reviews don't just help give customers a favorable impression of your products and services; they impact whether you show up in online searches at all. That's because search engines like Google use reviews to determine page rank. (Check out this Google support article How to improve your local ranking on Google.)

In our own research, we found that financial professionals and branches with 4-5 stars have a 45% improvement in search engine ranking. Additionally, they have a 15% increase in phone calls and an 18% improvement in website clicks.*

What tactics can financial services and insurance firms use to mitigate regulatory and brand risk and maximize revenue?

Previously, when financial advisors or teams liked, reposted, responded to, or solicited reviews, they became entangled and/or adopted these reviews. This meant financial advisors were responsible for the accuracy of the review. As a result, very few wealth management teams allowed financial advisors to engage with reviews. Now, that's changing.

There are four main strategies for managing reviews. (You don't have to do them all, so work with your compliance and business partners to evaluate and prioritize these use cases.)

1. Review Monitoring (low risk and effort) - You can pull in reviews from the internet to understand your reputation, gain valuable insights, and use these insights to optimize your business and mitigate risk. Monitoring was allowed before and after the new SEC law, and it's something all teams should be doing.

Key Decisions:

  • Monitor 3rd Party Reviews on Google, Facebook, etc.

  • Build reputation management reports for individual FAs, Teams, Complex-Heads, Territories, and Service lines (ex. Wealth Management)

  • Enable Sentiment Analysis reports to understand insights at scale. (ex. positive or negative comments, service vs sales, etc.)

  • Setup specialized notifications to compliance teams? (ex. Guaranteed best performance)

  • Setup Competitive intelligence to understand how you compare to local competitors

2. Review Generation (medium risk and effort) - The solicitation of reviews is usually conducted via email or SMS, but often clients can generate reviews in a QR code within print material or within their self-service customer portal. Remember people that generate reviews improve their star rating by 1.1 stars.*

Key Decisions:

  • Select the appropriate channels to solicit reviews from customers. Often clients start with email, then expand to other channels - email, sms, print, online portals, and financial advisor pages

  • Which financial professionals would you like to include in the program?

  • Who can solicit a review? The financial advisor, marketing, or do you want them to be automated triggers (ex. Annual Client Performance Reviews).

  • What disclaimers do you want to include in the solicitation process (ex. Is a client, compensation, and conflict of interest)?

  • Do you generate reviews from just clients or prospects too?

  • The quarantine period can be adjusted to fit your needs

3. Review Response (medium risk and effort) - The ability to respond to customer reviews in a timely manner. Responding to reviews can increase review ratings by .33 stars.*

Key Decisions:

  • Who can respond to reviews? financial advisors, marketing, compliance, etc

  • How quickly should you respond to reviews?

  • What type of reviews or percentage of reviews should a firm respond to?

  • What method do I want to use to respond to reviews?

  1. Custom Responses - responder can craft any message but it will have the proper controls and supervision

  2. Pre-approved Responses - responder can choose from a list of preapproved responses

  3. Intelligent Responses - AI-assisted review response

  • Define user controls and workflows required to manage the process

4. Review Marketing (medium risk and low effort) - Leverage reviews to build trust signals for customers, prospects and online search engines. Remember, customers with 4-5 stars have a 45% improvement in organic search.

Key Discussions:

  • Display aggregate reviews on the branch pages or financial professional pages (ex. 4.7/5 stars out of 2,303 reviews for Joan Smith)

  • Display individual reviews with star ratings, comments, and disclaimers

  • Use reviews or endorsements in print material

  • Use reviews in broader marketing campaigns (ex. email, ads, etc.)

More Tactics to Drive Success

From our point of view, there are a few best practices that we'd suggest for financial services and insurance firms. Yext can help you with these steps as we've developed a set of assets and frameworks to assist teams.

  1. Develop a business plan to show the business value that reviews can drive for your business.

  2. Share with teams why reviews will disrupt the market (ex. 45% improvement in organic search, impact to AUM, projected investor acquisition)

  3. Determine a population of financial professionals to participate in phase 1 to build internal buy-in and validate the business impact

  4. Consider starting with Financial Professionals who have been with the firm for a few years or have been proven in the industry

  5. Start with review monitoring and generation, then you can move into more advanced use cases like review response and marketing.

  6. Develop a list of FAQs and educational material for financial professionals, legal, risk and executive management.

  7. Share a delivery playbook with IT and business to outline important design decisions (ex. Archiving, Disclaimers,etc )

  8. Develop key KPIs and processes to monitor reviews as they come in. Unlocking these insights can help distribution, service centers, product teams and more.

It's time to get started on taking control of your online reputation – today. Click here to learn more.

*Proprietary Yext data, 2021

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