When it comes to technology, the financial industry often moves slowly. Back when I was starting out as a financial planner and financial advisor, I was forbidden from having a website, or financial blog like this one for fear that it would constitute non-compliant advertising. The irony was that as someone a bit ahead of the curve on that, I likely could have built up the financial planning practice I wanted, without doing something I didn’t want, cold calling.
These days, numerous financial advisory firms run websites and blogs exactly like the one I wanted to run a decade ago. It begs the question how it can be perfectly fine, and non-scary now, but not then. I also never understood how a person who feels good fast-talking strangers on the phone would be considered “more honest” than someone willing to put into writing what they were saying. But, rules are rules.
Text Messaging Financial Professionals and Brokers
Not long after I left financial planning, I wrote some articles about the SEC and FINRA slowly loosening rules on various forms of electronic financial communications, in particular releasing things like Quarterly Reports on a company website, instead of the, then current, default method of paying a company to send out press releases. From there, we looked at how companies could, and could not, use social media platforms like Twitter.
While those methods have gone mainstream, there are still some areas, where financial professionals are largely handcuffed, in ways that may not make much sense.
If you call your broker, and ask them a question, and he or she answers, that is perfectly fine, legal, and expected.
If you send a text message to your broker and ask them the same question, and they answer by text with the same answer, that is not allowed, and can lead to fines and suspension for the financial professional.
You see, regulators require that all written communications be preserved and routed through a compliance department. Verbal communications require no such compliance. So, guess what method of communication is preferred in the financial world?
The reason this makes no sense is that the communications can be exactly the same, but one method is allowed and the other isn’t. What makes even less sense is that a text could be saved or archived and used to establish good faith, while words on a telephone cannot. In other words, communicating by text, or email, or other writing favors the investor. So, why do regulators that supposedly exist to protect the investor go out of their way to make those forms of communication less usable by financial professionals?
Your answer is as good as any.
Times will change.
But, until then, don’t be surprised if your broker, financial planner, financial advisor, or financial advisory office won’t reply to your text. They probably aren’t allowed to.
Make the call, or send the email.