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Texting: The Holy Grail for Modern Financial Services Professionals

Compliance remains a significant hurdle advisors face when texting clients, but it's one that can be managed.

Texting is rapidly becoming one of the most important business channels for financial advisors. It provides immediacy and the ability to forge a connection that people crave. Better still, people from all demographics understand how to text, enabling financial professionals to use a single medium to reach the widest possible swath of clients and prospects.

On top of this, text messages yield an astounding 98% open rate. That is a sales and marketing dream, especially when you compare it to email (20% open rate). In part, this is likely due to the fact that text is not yet overrun with spam, but when advisors use it well, the immediate impact and benefit of the medium are hard to deny. While recipients are free to ignore texts until it is convenient, currently 90% of them are read within three minutes

Yet as wonderful and transformative as texting can be for financial professionals seeking to grow their business, it is not without its challenges. Chief among them is compliance. 

Managing Risk, Gaining Rewards 

Compliance is often seen as the elephant in the room, the rain on the parade. In this case, the responsibility of monitoring and enforcing compliance over text communications has slowed adoption in the financial services sector. Aside from the complications of mandatory communications auditing, the 1:1 nature of text interactions can make it hard to ensure every message itself is compliant with regulations, as many can blur the lines between friendly banter and financial advice in a client’s best interest.

It can also be difficult to capture every relevant message. Advisors often want to use a single device for all of their personal and work communications. Separating client and prospect texts from exchanges with friends and family is not always intuitive. Messages get missed in audit trails, and then there is a problem. Admittedly, this is a significant hurdle, but not one that can’t be managed with tools that allow for pre-review of text communications and automated archiving.

Overcoming Challenges to Realize Value

The upside of texting far exceeds the potential pitfalls. Not allowing advisors to text with clients and prospects is no longer an option. Advisors and firms shouldn’t skirt the boundaries and safeguards—the consequences of violating industry regulations are too great—but there are precautions that can dramatically reduce risk so organizations and representatives can fully reap the benefits of text interactions.

It requires that companies develop secure programs that can be rolled out across the field. This can be accomplished by leveraging a modern compliant texting solution—which includes sophisticated capabilities such as lexicon blocking, customizable workflows, automatic regulatory updates and archive integration—and can be augmented with external expertise to help drive compliance and risk management best practices.

Once comprehensive compliance and supervision best practices are in place, the table is set for driving field productivity. For example, research shows that response time is critical to sales. When potential leads are contacted within the same minute they submit an inquiry, the increase in sales conversions is 391%; if response time falls between 5-10 minutes, the odds of qualifying a lead drop by 80%. In addition, 78% of customers buy from the company that responds to them first. Responding to inquiries via text is not only fast, it gets far more attention than a form email generated from an inquiry.

Additionally, texting saves advisors countless hours. With much higher response rates via text, they are no longer forced to spend time on multiple follow-up calls or emails that go unreturned, for example, when trying to set up an annual review with a client. By granting delegates the ability to manage scheduling and service requests, financial reps can focus on the work that benefits clients—such as preparing a well-thought out agenda and recommendations for that client meeting. 

From Compliant Texting to Orchestrating Outcomes

Beyond compliance and productivity benefits, modern texting programs enhance visibility and workflow orchestration. Syncing client interactions and contact information with the CRM system saves time and delivers insights for managers to improve field effectiveness. Embedding texting within CRM allows advisors and delegates to text within the CRM application screens, saving time switching devices and helping drive CRM adoption. Not only are text details recorded in advisors’ CRM, triggered workflows can suggest next-best actions such as scheduling annual reviews, proactive outreach for required minimum distributions, and lead follow-up. Using this type of informed outreach—with personalized texts and follow-ups—helps advisors to hit the mark when it comes to smart engagement.  

Final Thoughts

Texting is a way of life. It has fundamentally changed how consumers want to engage, receive and share information, and financial organizations must adapt in order to attract and retain clients. If they don’t provide texting options to their field representatives, their financial professionals will be at a severe disadvantage in an increasingly competitive landscape where consumers expect rapid, efficient responses on their terms. It can also impact a firm’s ability to attract and retain quality advisors, which is no small factor in the midst of the present hiring crunch.

To reap the rewards, advisors should proceed judiciously when texting clients and prospects. Sometimes less is more, and texts should remain focused on value-add for the client or prospect. This will ensure advisors continue to cut through the noise as text messaging gains popularity as a marketing channel in other industries.

And of course the compliance piece is complex when it comes to texting, but organizations have been forced to adapt before. It seems unimaginable today, but it was not that long ago that regulatory bodies developed the first digital communications guidelines, guidelines that are now commonplace and effectively addressed. Text is the next piece in the digital puzzle. Organizations must put the pieces together to complete the full picture. If not, they risk falling so far behind their peers they may never recover.  

Michael Boese is CEO of Hearsay Systems

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