Compliance

Adapting to Change: Text Message Archiving for Financial Advisers

August 22, 2024by Smarsh

How have you adapted to changing communication preferences, and is it enough to minimize regulatory risks associated with the use of text messaging and other mobile applications?

Why it Matters

With mobility reshaping employee and customer communication, financial advisers must embrace evolving dynamics to reduce risk and ensure smooth operations. The shift to a hybrid work environment has made creating a robust mobile compliance strategy even more vital.

As businesses focus on boosting revenue and accelerating transactions, adapting to the changing technological landscape is essential. Modern financial advisers are looking to make compliance management easier, more efficient and more reliable. At the same time, they are utilizing standard text messaging and other third-party apps to help streamline their communication and transactions, with the goal of driving business growth.

Here’s what you need to know about text message archiving for financial advisers:

The world is mobile whether you are ready or not

As a financial adviser, it's crucial to understand the changing dynamics of customer communication. While email remains a vital tool, customers are inundated with emails, both business and promotional, leading to slower response times. Text and instant messaging applications offer a way to capture customer attention and facilitate quicker responses.

However, a recent poll of webinar attendees found that 21% of firms still don’t allow text messaging with clients. 64% of firms said that monitoring for prohibited communications is still the biggest pain point for enabling mobile communications. We know from experience that prohibition alone is not sufficient. So, what can firms do to adopt these new channels compliantly?

By embracing modern communication channels, including text and instant messaging apps like WhatsApp, firms can enhance customer satisfaction and meet clients where they prefer to communicate. Advisers and their firms must acknowledge customers’ evolving preferences, especially in a work environment where traditional communication channels, such as phone, fax, and email, are considered outdated and inefficient.

It is critical, therefore, that firms are prepared to enable compliant communication on these tools and ensure they can capture and archive all of the channels in use by their employees.

What to choose: BYOD or corporate-owned devices

Financial advisers everywhere face mobility risks. One of the biggest keys to mitigating that risk and driving business growth is to carefully choose between a bring-your-own-device (BYOD) or corporate-owned device policy.

BYOD poses the risk of commingling personal and client communications, while corporate-owned devices offer greater control and easier supervision. Whichever strategy your firm employs, establishing specific policies and procedures for permitted mobile apps and their usage is crucial, especially given the collaborative nature and embedded features included within many new mobile apps.

The practice of capturing and archiving text-based conversations is essential for protecting the truth and ensuring compliance. By accurately retaining conversations and making them easily retrievable, firms can mitigate mobility risk and foster business growth while maintaining transparency and accountability.

Mixing personal and professional communications is a recipe for disaster

Financial services firms must carefully consider the risks associated with employees using personal devices and text messaging for work-related purposes. Information commingling on personal devices can lead to complications during examinations by regulatory bodies like the SEC. To maintain separation between personal and business information, firms should have a clear policy on mobile device usage and encourage the use of corporate-owned devices.

If sensitive information is found on personal devices, lengthened examination periods by the SEC can occur, leading to further investigations and potentially stressful and resource-intensive audits. Establishing strong policies and procedures, providing clear guidance on what is allowed and what is not, and ensuring continuous training and compliance with these policies is crucial for an effective mobile compliance strategy for financial services firms.

The technology component is crucial

Before allowing text messaging, financial advisers must be sure that they have the right archiving solution in place that can capture and archive text messages and other messaging data in compliance with regulatory requirements. Choose an archiving solution that can capture and store all messaging data in full conversational context including metadata like replies, emojis, attachments and more.

Once you’ve ensured that you are capturing and archiving text messages properly, you must also ensure you’re reviewing those communications on a regular basis. Depending on your firm size, that could be weekly or monthly. It’s also important to review and update your lexicons frequently.

Changes bring new opportunities

Embracing modern communication channels such as text messaging and instant messaging applications can enhance customer satisfaction and drive business growth by meeting customers where they prefer to communicate.

Advisers should:

Establish strong policies and procedures
Provide clear guidance to employees
Foster open communication and compliance
Employ an oversight solution that can capture, archive and monitor a wide variety of communication channels

Your goal should not be to avoid fines and negative publicity alone. Advisers should aim to potentially boost revenue and improve customer satisfaction scores through mobility enhancements, ultimately creating sustainable growth.

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Smarsh

Smarsh® is the recognized global leader in electronic communications archiving solutions for regulated organizations. Smarsh provides innovative capture, archiving, e-discovery, and supervision solutions across the industry’s widest breadth of communication channels.

Scalable for organizations of all sizes, the Smarsh platform provides customers with compliance built on confidence. It enables them to strategically future-proof as new communication channels are adopted, and to realize more insight and value from the data in their archive. Customers strengthen their compliance and e-discovery initiatives and benefit from the productive use of email, social media, mobile/text messaging, instant messaging and collaboration, web, and voice channels.

Smarsh serves a global client base that spans the top banks in North America and Europe, along with leading brokerage firms, insurers, and registered investment advisors. Smarsh also enables state and local government agencies to meet their public records and e-discovery requirements. For more information, visit www.smarsh.com.

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