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Regulation and Compliance > State Regulation

Compliance is King

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Today’s marketers are also jugglers who must educate, curate and entertain in an ever-expanding, increasingly global marketplace. It’s a tall order, and one that, in the insurance industry, comes with serious strings attached. For advisors, client-facing marketing materials are subject to close scrutiny from both state insurance departments and federal regulators. This means that every word must be weighed carefully, not only in brochures, newsletters and seminar materials, but also in social media posts and web communication.

In an age of online information, compliance is of critical importance. No longer an issue that can be dismissed or postponed, a formal compliance review has become an actionable step that insurance marketing organizations and independent agents alike are beginning to incorporate into their workflow.

But how can you do this without overwhelming your staff? One solution is to hire a third-party compliance expert, whose sole duty is to review each page of marketing content – and ensure that the compliance ball is never up in the air for very long.

Read on for three benefits of a fully compliant practice.

1. You can communicate the way consumers communicate.

The modern consumer encounters hundreds of marketing messages each day – which means that being in the right place at the right time is vital. The messages that stick are the ones that fit seamlessly into a prospect’s lifestyle. This means different things for different people, but increasingly, social media platforms are where consumers go to get information, to solicit feedback from other users and to build relationships, both personal and professional.

It’s not just the Millennials who are subject to social media’s charms. The percentage of baby boomers that are active on Facebook and Twitter grew 60 percent from 2010 to 2011. Seniors have expanded their share of the social media community by more than 150 percent over the past two years.

Christie Campbell, director of marketing at Socialware, a compliance software provider based in Austin, Texas, notes that, given the growing size of clients’ personal networks on sites like Facebook and LinkedIn, advisors who don’t engage on these platforms have a tremendous amount to lose. “Simply banning social media for financial professionals is no longer a reliable option,” she says. “The benefits of leveraging social media are many, but there are regulatory guidelines to follow. It is important to put the right measures in place to safeguard the business, have a social business strategy and realize the client potential that social networks represent.”

Randy Matzke, director of marketing oversight for Advisors Excel, an IMO based in Topeka, Kan., acts as in-house compliance officer for his firm, but says he has been working with a third-party compliance consultant for nearly two years now. From the start, he felt there was simply too much content for one person to oversee, due to a robust turn-key marketing program he manages, which delivers weekly emails, Twitter posts, blog posts, Facebook content, quarterly newsletters and birthday cards directly to his clients’ clients.

This layered content strategy illustrates how marketing dynamics have changed: It’s no longer enough to stay in front of clients on a quarterly or even a monthly basis. The most successful companies are the ones who demonstrate daily that they understand their consumers’ needs. These companies earn loyalty through a remote, yet high-touch, approach.  

2. You’ll gain peace of mind.

Of course, the problem with such a high volume of content is that it increases exposure, and hence risk. Advisors industry-wide recognize this; there is an overwhelming sense of worry when it comes to matters of compliance.

Honey Leveen, an LTCI specialist based in Houston, Texas, says she was shocked when she received a letter from the Texas Department of Insurance two years ago, stating her website was not compliant with their standards and threatening to shut down her practice. After a lengthy phone debate, Leveen was able to make amendments that appeased them, but the conflict wasn’t over. Soon afterward, the TDI targeted her blogs, which, though linked to credible sources, did not meet their citation standards. Leveen was forced to take down more than 200 blog posts and start fresh. She caveats all of this by noting that, compared to other states, the TDI has always been notoriously harsh on matters of compliance. This softens her story, but only slightly.

For annuity producers, a wave of recent lawsuits has pushed compliance to the forefront of every sale. Matzke, whose firm focuses on the annuity market, says that with many states engaging in very proactive consumer protection initiatives, state and federal regulators alike are watching closely to ensure that these products are properly described, and that the benefits and features are disclosed in a way that makes sense to clients.

This increased need for attention to detail is part of what caused him to look for external support. In fact, he says, the greatest benefit that has come from working with a separate compliance vendor is the peace of mind it brings.

“The products we work with seem to always be on the radar of state and federal regulators, and I don’t see that changing anytime soon,” Matzke explains. “Anything we can do to protect ourselves and our clients from liability and to ensure the longevity of our company is something we want to pursue. I think working with a third-party compliance review team certainly does that. It provides peace of mind for us and our clients.”

3. You’ll expand your reach.

More tangibly, building an external compliance review into your workflow can help your firm grow comfortably, and more quickly than it might otherwise. Having a dedicated review team can provide a solid foundation if you’re looking to diversify your product range or grow your client base. Not to mention, it’s less cost-prohibitive than bringing on additional staff.

Corporate growth is something that Matzke has seen firsthand. As the premium coming in the door at his firm grew, he says it became obvious that they needed a full-time person reviewing material. The response from their clients has been significant.

“As our producers become aware that we had an internal resource dedicated to compliance, the volume of requests to review advertising grew,” he states. “This necessitated the need to look externally. We needed someone with the expertise to help offload some of that responsibility – which is a responsibility that we want, but that we simply don’t have the resources or expertise to handle on such a large scale.”

For her part, Leveen doesn’t work with a compliance partner, but only because she takes a long-term marketing approach, which means her materials don’t require frequent updates. Still, she sees the inherent value in such a partnership, and thinks that value is growing.

“If I created marketing materials more often, I absolutely would look to partner with someone,” she says. “It’s very, very useful to have that kind of guidance, especially now with the rise of the Internet, which makes it possible to do business with people all over the U.S., because there are reciprocal license agreements. So from that standpoint, it would be very useful to work with a compliance specialist who could review.”

Finding the right partner

Yes, the benefits are big – but only if it’s the right relationship. Matzke suggests that agents looking for prospective partners seek a firm that specializes in the types of products their firm sells and that can provide the level of review they need. And ask the right questions. “Are you an insurance agent only, are you an investment advisor, are you a registered rep?” he muses. “Find someone that you feel comfortable with and that fits with the type of business that you do.”