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Brian McLaughlin

Practice Management > Marketing and Communications

Our Clients Want Us to Text Them. Here's How.

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What You Need to Know

  • The five largest U.S. banks were recently hit with $1 billion in fines over use of unauthorized texting apps.
  • Regulatory issues abound, but that doesn't change the fact that texting is clients' preferred communication method.
  • Educate your staff in a face-to-face meeting, and codify your mobile communication policy.

Imagine it’s 1999 and you’ve just stumbled across a newspaper article heralding the news that SMS text messages can now be exchanged between different networks.

Unless you have a bit of technological savvy, you probably won’t be able to decipher exactly what that means. But even if you are tech-savvy, you likely aren’t giving much thought to how this technological change will revolutionize communication in the coming decades. After all, it’s 1999, and even if you have a mobile device, there’s a good chance you’ve never sent or received a text message yourself. 

Fast forward to today: When was the last time you used a landline to make a phone call? Or the last time you wrote a letter to a loved one, a friend or a colleague? On the other hand, when did you send or receive your last text?

This Opportunity Can Come With Costs. Minimize Them.

Our communication tools change over time. To communicate effectively with our clients, it is necessary to communicate with them in the channels they rely upon and prefer. 

Still, while texting has revolutionized communications and the client experience, innovation hasn’t come without regulatory cost for those in financial services. Just weeks ago, the five largest investment banks in the country were fined a total of $1 billion for failing to monitor employees using unauthorized texting apps such as WhatsApp. Last year, JPMorgan was fined $200 million for failure to preserve staff communications on personal devices. 

Though the management of these communication archives might seem outside the jurisdiction of investment banks and firms, the SEC and FINRA would ask us to think again. Fines for these types of regulatory violations have long been in play, but the penalties for improper conduct are growing in severity when it comes to mobile communication via apps and texting. 

Smartphones have transformed the world of communication irrevocably. Due to the corresponding regulatory ramifications of this transformation, advisors must put processes in place to maintain compliant advisory practices across the growing abundance of modern communication options. 

This means that advisors must consider compliance not only with texting but must also ensure every other mobile application that a staff member may use for personal communication (e.g., WhatsApp, Signal) will not bleed into business communications unless they have been vetted and approved via proper compliance channels.

Security issues surrounding technology have permeated every sector of business, and the misuse of personal communication devices and third-party applications for the transfer of sensitive materials is at the top of the list. As mentioned above, the United States’ top banks are paying the price for unregulated communication through these applications, which outwardly tout safety for the users through encrypted features. These measures, however, are not always compliant with FINRA and the SEC’s more stringent regulations. 

As intimidating as these concerns may be, providing a stellar client experience is hugely important in financial services, and meeting your clients where they are, in terms of communication, is a big part of that experience. When it comes to texting, the data doesn’t lie.

Eighty-two percent of text messages are read within five minutes, but consumers open only 1 in 4 emails they receive, and 90% of customers prefer text messages over direct phone calls. It’s evident that text messaging as a form of communication is almost universally preferred to email now, especially when a short, concise message is all that is needed. 

Educating Your Staff and Codifying Communication Policy

As with other regulated aspects of your business requiring compliance supervision, how mobile technology is (or is not) to be used for communication must be an ongoing educational process in your office.

It isn’t safe to assume that just because you’ve announced a policy on mobile usage that all your employees are strictly adhering to said policy, especially given how ubiquitous and amorphous texting and other newer forms of electronic communications are. That leaves it up to you to effectively iterate policies to the people you manage and give shape to the processes needed to protect your clients and your business. 

To begin this process, you can start with a face-to-face meeting with all employees to convey expectations regarding the policies you are enacting, while also cultivating a space for your team to ask questions and gain clarity. This allows you to drive home the importance of your mobile communications policy — where it might otherwise be overlooked in an email or Slack message — and creates room for your team to further their understanding and connection to the importance of these processes. 

Further, you’ll want to codify your policy so that it’s accessible to all your staff members should additional questions or concerns arise, as well as having follow-up meetings when significant changes are made to policies. Considering the rapidly evolving nature of modern-day electronic communications, policies should be reviewed regularly. An annual (or more frequent) review of your policy should be administered.

In the end it’s about your clients, for whom text messaging services are a must in 2022. Now that the technology exists to enable this, we need to marry those advancements with the mandate of every fiduciary to uphold the regulatory principles of the SEC and FINRA. So, to avoid fines as we step into the future to greet our clients, let’s text, but compliantly. 


 Brian McLaughlin is co-founder of Redtail Technology and president of Orion Advisor Technology.