Online reviews are coming for Financial Advisors. It’s easy to get prepared.
The SEC’s newest Marketing Rule has a compliance deadline of November 4, 2022. Because of changes laid out in this rule, we will be able to look back on 2022 as the point where financial advisors began to embrace online reviews. Let’s elaborate.
Background: If you aren’t already aware, in December 2020, the SEC updated its Marketing Rule for the first time in 40 years, stating in a press release, “In the decades since the adoption of the current rules, advertising and referral practices have evolved.”
There are many changes in the updated rule, but of particular significance are the changes and clarifications around the use of Testimonials and Endorsements. Broadly speaking, the new rule is much more permissive and much more clear about the use of Testimonials and Endorsements as part of an advertising and marketing strategy. (Note: please do not mistake this blog post for legal advice. Always consult with your compliance professionals before implementing any new programs).
What about Online Reviews? The new language does include details about when and how Testimonials and Endorsements can be used in advertisements. There are also details about the prohibition of using Third Party Reviews in advertisements (without including proper disclosures and satisfying certain criteria). But these updated regulations leave the door open for many elements of an online reputation management strategy which is focused on growing positive online reviews for your firm and your advisors.
Compensation Consideration Perhaps one of the most important elements to be aware of is this: many of the regulations around testimonials and endorsements are written under the assumption that the person providing the testimonial is paid. If your reviews are coming from clients who write the reviews without compensation, you avoid a number of regulations and disclosure requirements all together. And consumers have now been well trained by other businesses to leave reviews (for free) when businesses deliver good experiences.
Third Party Reviews – Google Business Profiles Google often automatically creates Google Business Profiles (formerly called Google My Business Profiles) for businesses without any input from the businesses. Once a GBP exists, consumers can leave reviews on that profile. There’s nothing in the rule that prevents Google from creating these profiles, and there’s nothing that prevents consumers from leaving reviews.
Peer Pressure – when it starts, it will catch on quickly. The founding team at Amplify Reviews were at the forefront of the “patient experience transparency” movement that has swept through healthcare systems across the country. Over 400 health systems in the US now publish their patient feedback on their own websites in the form of ratings and reviews. The first hospital to do this only started in 2014, but once one hospital in one area starts sharing their patient feedback, it looks like other hospitals have something to hide if they don’t follow suit. There’s plenty of reason to believe that the same adoption curve will be observed among financial advisors.
You can “buy the option.” One of the unique aspects of the Amplify Reviews approach is how we can help our clients to start collecting reviews now, but they can wait to publish those reviews until it makes sense for them. Often, when our clients see how positive the feedback is, they’re eager to go ahead and publish the reviews. But, if they would prefer to build up a war chest of positive reviews so that they can be a fast follower, we support that approach as well.
Risky to wait and see – Once you understand the approach described above, the only approach that doesn’t make sense is to do nothing. To just wait. Implicitly that means you’re counting on online reviews never being adopted for financial advisors. Or that you’re comfortable knowing you will be a late adopter once your peers start to embrace online ratings and reviews. I know many will choose to do nothing, but I doubt any of them can articulate why that would be a good strategy.
It’s easy to start – Really, it is. Contact us today to have a conversation about how we can customize our review generation approach to your current business processes. Even if you decide not to take action right now, you’ll sleep easier knowing you’ve thought through the implications of the new SEC Marketing rule on your business.