The Securities and Exchange Commission’s plan to modernize its outdated advertising rules will help advisors reach prospective clients, as “more and more people are not engaging” with traditional media — like television, radio and print — that advisors currently use, according to Clara Shih, CEO of Hearsay Systems.
Shih told ThinkAdvisor in a Thursday morning interview that the SEC’s planned change to its Advertising Rule is “a promising sign” for advisors, compliance teams and investors “because it provides clarity.”
The securities regulator proposed updates on Monday to its Advertising Rule that would let advisors use testimonials, endorsements and third-party ratings to solicit clients, subject to certain conditions. The reforms also include tailored requirements for the presentation of performance results, based on an ad’s intended audience.
“Times have changed,” Shih said. The SEC’s planned updates will provide a way for advisors “to get the word out in a compliant way through channels and mediums that people actually use and rely on for information, vetting and decision making.”
Retail investors today, Shih continued, “naturally look to social media as part of their client journey, to validate whether they want to work with a particular advisor or want to continue working with an advisor.”
She cited research by the Pew Charitable Trust, which found that 69% of American adults use at least one social media site, with use jumping to 88% among those age 18 to 29.