Securities America latest broker-dealer to let advisers use text messaging

After two years of development, the company is believed to be the first major IBD with a compliant texting solution

Jan 18, 2018 @ 2:56 pm

By Ryan W. Neal

More financial institutions are bringing text messaging to their advisers.

Securities America, a subsidiary of Ladenburg Thalmann Financial Services, has a new app that lets advisers use their personal mobile devices to send and receive texts from clients.

The app, developed by CellTrust, which also helped Merrill Lynch bring to market a text message service for its advisers, captures and stores the messages in Securities America's archiving platform to be compliant with Finra guidance that requires all messages to be retained, just like all written and email communication.

Securities America's senior vice president of supervision Gregory Smith said the firm's business model – and adviser force of independent contractors rather than employees – create unique compliance challenges.

For example, Securities America advisers use their own mobile devices instead of company-appointed phones. Instead of syncing with a corporate directory and the adviser's office line, as Merrill's texting solution does, Securities America's app creates a separate number for clients to text, letting advisers keep business and personal communications separate on their personal devices.

"That's why a texting solution has been so difficult to come to market," Mr. Smith said.

Though texting has long become the communication channel of choice for many investors, many financial institutions prohibit advisers to use the medium because of compliance concerns. It took Securities America nearly two years of testing and planning, which concluded in October, before initiating a test program.

(More: Redtail launches compliant texting platform)

"We knew [advisers] all wanted to text, and we were able to go through a process and come up with a solution," said Mr. Smith, adding that Securities America is the first independent broker-dealer to allow its advisers to text message clients. "It's exciting to our advisers, exciting to their clients, and exciting for us as a broker-dealer to be that leader in technology."

Other major IBDs such as Raymond James and Ameriprise did not respond to request for comment, while LPL was unable to provide an immediate comment.

In addition to archiving texts, Mr. Smith said Securities America's technology also provides the firm with oversight capabilities to review communications. He added that advisers and clients will be prohibited to discuss trades, and that texting will be limited to quick and casual communication that doesn't warrant an email or phone call.

Dan Grote, a partner at Latitude Financial Group who took part in the testing program, said that while clients expect advisers to communicate via technology, they aren't aware of the regulations.

"If you're an adviser trying to work with millennials, Gen Y or X, you'll find a strong preference for text communications. Even baby boomers prefer to send a short, one-line text regarding trivial matters," Mr. Grote said in a statement.


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