Advisers turning to text messages to communicate with clients

With email inboxes getting more and more jammed, firms give text messaging a fresh look

Aug 16, 2017 @ 4:40 pm

By Liz Skinner

+ Zoom

Financial advisers over the past 12 months have been giving text messaging a fresh look as a method for communicating with clients, in part because email has become a much less effective way to connect.

Advisers are recognizing that response rates are much higher and response times are much lower using text messaging compared to emails, said Mark Gilbert, chief technology officer at Hearsay Systems.

Email boxes have become cluttered, making it harder to identify important messages, and attachments and action items increasingly get buried by a chain of notes back and forth, especially in group emails. Texting also is how younger people want to communicate.

(More: In the future, advisers will be at customers' beck and call)

"Some advisers have gone so far as to say they're not going to work with clients who are under 35 if they can't text them," Mr. Gilbert said.

Mr. Gilbert expects advice firms using texts — which he pegs at about 10% or less of all advisers — will probably double over the next year.

Other industry analysts agree text rates are headed up.

"As advisers pick up more digital savvy clients, those clients are going to demand texting because they use it with every other professional in their lives," said Bill Winterberg, founder and president of FPPad, a financial services industry technology consulting firm.

Regulatory concerns keep most firms from allowing text messaging between advisers and clients today, but new rule clarifications in recent months may encourage more firms to move in that direction. Compliance firms also are introducing more tools to help.

In April, the Financial Industry Regulatory Authority Inc. clarified some of its rules regarding text messaging as part of a notice about social media and electronic communications. It spelled out that firms need to archive text communications between advisers and clients.

Firms like Hearsay and Smarsh have introduced software to archive texts and implement other controls.

For instance, companies must have written consent before any representatives can text a customer for business purposes, according to Federal Communications Commission's Telephone Consumer Protection Act rules, Mr. Gilbert said.

So far, planners are most often using texts to set meetings and send meeting reminders, he said.

(More: Meeting clients' high-tech expectations)

Oxygen Financial, which targets clients from Generations X and Y, however, has been using one-way texts for marketing for about four years. Clients receive a text from Oxygen but cannot respond to the text message.

It now has about 10,000 subscribers to whom it sends a one-way text monthly offering a bit of financial advice, reminders or offers for a free consultation.

Ted Jenkin, Oxygen Financial co-chief executive, said the open rate on the firm's texts are 90%, compared with a typical rate of about 10% for newsletters or other emailed messages.

"Advisers need something to use with people that's mobile-technology driven or they will be behind the curve," he said.

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