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Meeting Financial Advisor Compliance Requirements in Digital Marketing

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FMG Suite’s seminar, “Growing AUM Through Digital Marketing,” was designed to address digital marketing in the financial services industry. Moderator Rick Fox, VP of Corporate Development at FMG Suite, initiated discussions covering technology, inbound marketing, automation, and more. To further benefit financial advisors and others in the industry, FMG Suite compiled the best of these discussions and the invaluable feedback of participants into a five-part series.

Today’s topic, and the fourth installment, covers financial advisor compliance requirements in online marketing. Using the insights of industry insiders, from CEOs to digital media specialists, as a springboard, we created a “Compliance in Marketing” guide specific to the financial services industry.  

Financial Advisor Compliance Requirements: Risk vs. Reward 

There should be no doubt that digital marketing is a powerful tool for engaging prospects and clients, but many in the financial services industry are tentative about jumping on board. But why? While financial professionals accept the necessity of digital marketing, as well as the potential rewards, meeting financial advisor compliance requirements in a marketing campaign can seem daunting. 

Because much of online marketing can be interpreted as advertising, the content and the tools used to deliver that content are subject to industry regulations. Combined with cybersecurity concerns, compliance issues can make digital marketing seem like a risky proposition. But simply ignoring the necessity of digital marketing can be just as dangerous in an already ultra-competitive industry.

The key is to find that balance between risk and effectiveness. As Brian Cody, VP of Digital Media at Waddell & Reed puts it, “Trying to find a system that finds that balance or finding a toolset that finds that balance is what we are always looking for. If you go in too heavy one way or another, you might be a better partner with too much risk, or you might not be allowing enough functionality to be competitive.” 

How can financial advisors provide useful content when they have to tip-toe through every post, tweet, and landing page while avoiding the security risks inherent in marketing technology tools? By knowing the rules of compliance and using them as a filter for all marketing efforts combined with a comprehensive vetting process for marketing tools, data storage, and other risk-inherent elements, building a safe, compliant marketing process is possible. The result of a well-thought-out compliant marketing plan is minimized risk and the reward of increased AUM. 

Removing the Fear Factor

Whether it’s a lack of knowledge about technology tools for marketing or how to align compliance with marketing efforts, some financial advisors actively avoid digital marketing. For the advisors who embrace online marketing, there are still many who don’t understand the dangers of marketing elements that don’t meet compliance standards.

As Andy Barksdale, Senior Vice President of Marketing at LPL Financial says, “… at the home office we have got a set of concerns about the proliferation of these [marketing] tools and how they are being sold, and many times advisors want to use the tools for all the right reasons but are not really aware of the concerns that might exist within a contract.” 

Financial advisors are experts in wealth management and are required to understand and follow industry regulations. Should they also be expected to be compliant marketing experts? Yes and no. Yes, when it comes to filtering their marketing efforts through the rules of compliance, and no when it comes to creating content and structuring how that content is presented. Compliance is a requirement and advisors can be barred from the industry and fined if they violate these policies. Is it any wonder that some financial advisors would avoid digital marketing because they fear the consequences? 

Why not take compliance out of advisors’ hands and let them focus on converting prospects and serving clients?  By starting with clear communication between advisors and marketing, staying on brand and meeting financial advisor compliance requirements is possible by following some basic guidelines. 

  • Collaborate with advisors to develop brand best practices and focus on actionable steps for advisors to enforce the brand.
  • Make the practices simple to implement. Complicated steps will just lead to frustration and create a lack of commitment.
  • Create customizable and compliance-approved content. Lockdown specific visual and written content and disclaimers but allow advisors to personalize some aspects for better engagement.
  • Control and monitor what information advisors can access with technology like permission-based tagging by finding ways to connect content libraries and compliance through ERP or similar software.

Cybersecurity and ID Theft


“First and foremost, we want our advisors to know that when we are recommending any service, their data is protected at the most basic level.”

Leah Alter, Director of Marketing and Consulting, Kestra Financial

Cybersecurity is most likely the top concern for financial advisors and compliance officers. ID theft and other breaches that compromise clients’ personal information or assets is an advisory firm’s worst fear come true. As painful as it may be to their bottom line, firms need to allocate adequate resources for cybersecurity to ensure the safety of client data.

“While it’s important to have an adequate budget for cybersecurity, how a program is organized and governed may be equally if not more impactful than how much is spent relative to a company’s overall IT budget or revenue.”

(Deloitte, 2018) 

The finding above from Deloitte’s recent survey on the state of cybersecurity at financial services institutions suggests that the commitment level of an institution may have more impact on overall security than the financial investment. A top-down buy-in and rigorous training for administrative and other staff members will ensure more comprehensive security. In addition, educating clients on security elements such as password and additional login protection is critical. 

Financial Advisor Compliance Requirements and Best Practices 

Avoid Advising
Contradictory to their job title, financial advisors must avoid dispensing advice to mass audiences. One of the most fundamental tenets in financial services compliance is that any advice must be client specific based on factors such as risk tolerance, financial goals, and other criteria. Financial advisors should only advise clients one-on-one.

Beware Adoption

Passing on enticing financial information to clients is a natural inclination for financial advisors, but it comes with some compliance risks. In compliance lingo, adoption is the endorsement of information provided by others. The simple act of retweeting a social post or commenting on and linking to an article online may seem innocent but can be risky. If there is any doubt in a regulator’s opinion that the advisor is “adopting” or endorsing the non-compliant information or point of view, then it could be considered a breach of compliance.

No Solicitation
In the world of financial services, compliance regulations assume the premise that financial advisors are more knowledgeable than their clients and see that disparity as a disadvantage for advisees. To compensate for this disadvantage, advisors are prohibited from soliciting prospects and clients in mass communications. The prohibition of solicitation includes the use of the familiar “call-to-action” marketing elements such as “learn more” and “sign up today” buttons found in many marketing pieces.

Habitual Hoarding

Financial advisor compliance requirements dictate that advisors hoard nearly every document and other types of professional communication. All client communication, from tweets to white papers, must be kept for five years. These communications must be archived in an organized manner, whether hard copy or digital.

Stop Stating

Especially relevant to social media, and closely aligned with adoption, financial advisors can avoid many compliance issues by merely avoiding making statements. Instead, presenting information in the form of a question often circumvents the scrutiny that can accompany direct statements. An example of this would be linking to a blog post about an investment opportunity with a query: “This perspective on Smith and Company’s stock price looks promising, don’t you think?” A simple change in wording can make all the difference with compliance.

Direct Instead of Dictate
An article distributed by a financial services company that outlines a process for determining if a particular investment is worth a look is quite different from an article that defines the investment as a recommended option. Remember, a financial advisor’s function is to educate and advise, not to dictate the financial choices for their clients.

The reality is that taking the risk out of digital marketing for financial services and reaping the rewards isn’t that difficult if that marketing is built on the foundation of compliance. When everyone in a firm understands the rules and is committed to security and compliant marketing, compliance requirements shouldn’t be viewed as something to fear. With education and collaboration, compliance officers should be able to provide guidance while allowing some freedom for advisors to be able to apply that personal touch to their communications with clients.

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