There are an awful lot of rules which protect clients of the financial services industry - and rightly so. Some of them, however, can be cumbersome and pesky, but they are to be followed, nonetheless. One such rule is that all correspondence between financial advisors has to be retained for further examination if needed. This might seem logical, however, when we get into the weeds, we can see where this might be a more difficult rule to follow than initially thought.
For example, texts are a form of communication which have to be stored. This means all business-related texts between a financial advisor and their clients. It becomes especially confusing when clients are friends or family of the advisor, which is often the case, and also have the need to text about personal matters.
All financial advisors are required to have a business text line which is solely used for business texting. We also text with friends and family members who are clients on non-business-related matters from our personal phones. Confusion is created because clients, not being privy to the rules, will often text the wrong topic on the wrong line.
The industry regulators are so concerned with this topic that, since 2021, financial services firms have been fined over $2.5 billion in an initiative which has been led by the Securities and Exchange Commission (SEC), with some firm being fined as much as $400 million.
Advisors don't enjoy reprimanding clients about using our personal numbers for texting, we are simply following the rules. At Seasons Wealth, we comply with this policy by using a software program called RedTail Speak and ask that clients store the associated number in their cell phones for business texting.
These rules are not something for the client to be overly concerned about as the onus is on the advisor. So... the next time your advisor texts, "Please move this question to my business text line...", you'll know that you are working with a financial advisor who takes compliance seriously and is simply following the rules du jour.