Sander Ressler, managing director of Essential Edge Compliance Outsourcing Services, has launched a company to help financial advisors create video testimonials that comply with the Securities and Exchange Commission’s new advisor marketing rules.
That rule took effect in May 2021 and opens the door for advisors to use client testimonials and endorsements in advertising, as well as the kind of portfolio performance metrics firms can use when marketing their services.
“For the first time in my lifetime, the regulators actually gave us something rather than taking it away,” Ressler said. “And they gave us the ability to use testimonials.”
Yet advisors, still unsure of what is allowed, largely aren't taking advantage of the new opportunity as they are unwilling to engage in the time-consuming back-and-forth with internal marketing and compliance departments, he said.
Ressler is betting he can provide the advisors with a turnkey video marketing solution that is ensured to fall within the rules.
Ressler’s company, Vidiance, will send the advisor's clients, should they agree to participate, a tripod, with a built-in microphone, that they attach to their phone. His team then contacts the client and asks them a series of questions over a 30-to-40 minute recorded interview. Using a transcript, Ressler's team highlights which client statements are best for the testimonial, then cuts the footage down to a two-minute, SEC-compliant video that is sent back to the advisor.
Ressler said his team has produced content seen by compliance departments at eight firms with no negative comments so far.
“We go from the interview with the customer to the completion of the video in 10 business days or less,” he said. “We really believe this integration of compliance into the process saves everybody time and money.”
Ressler said he is conservative in his edits and looks for the testimonials to be “fair and balanced.” He removes any "hyperbole" and discussions of investment performance.
“I don’t want anybody going, ‘Wow, he’s the greatest advisor on the planet,’” he said. “If you look at our videos, they are actually pretty generic. There’s not a lot of controversy. My goal as a compliance officer is not to walk up to the gray line and figure out whether something crosses it or not. I’m five steps behind that line.”
Clients that agree to offer testimonials must sign contracts to give permission to use their name, image and likeness to protect the advisor from future legal issues.
Regarding the possible issue of cherry-picking certain clients, Ressler says he consulted with former regulatory attorneys, who said it wouldn’t make sense to ask hundreds of clients for video testimonials.
“What we said was, ‘A testimonial, in and of itself, is a form of cherry-picking, but if we give full and fair disclosure, and there’s absolutely no hard or soft compensation, that’s fine,’” he said. “I can’t imagine a regulatory saying, ‘That’s not fair.’”
Vidiance also offers to look at the video every year to make sure it still represents the right image of the advisor and is still compliant.
The company charges about $2,500 for a single video; advisors get discounts if they sign on for multiple videos. The annual refresh costs about $300.
Ressler said the company started with a beta group of six advisors, and has since sold three more packages on top of that. He said a lot of the advisors in the beta group were interested in other types of videos, in addition to the testimonials, such as profiles, educational videos and quick hits for social media sites.