A new SEC guideline now allows investment advisors to
publish public reviews on third-party websites, possibly giving advisors the
opportunity to leverage this new freedom as a marketing opportunity to build
business.
The new SEC guideline to rule 206(4)-(a)(1) of the
Investment Advisors Act of 1949 essentially states that advisors may publish
unaltered public comments about their services that are posted on third-party
websites, provided that they include all comments, both positive and negative,
and that the advisor has no connection to the third-party site or influence on
the comments. Additionally, advisors may post a mathematical average of
comments from third-party review sites.
Ultimately, this new guideline allows investment advisors to
participate in a PR/marketing channel from which they have been previously
excluded, due to SEC regulation. Multiple industries, including restaurants,
hotels, spas, and so many more have relied on endorsements, reviews, and
recommendations from happy customers on websites such as Yelp or Angie’s List as
a form of promotion. Although this provides a new opportunity for advisors,
they must carefully measure the pros and cons of publishing reviews as this
decision affects both PR/marketing efforts as well as regulatory compliance.
For investment advisors, it’s important to keep in mind that
the world of free, open-forum reviews is a double edged sword. The SEC
guideline clearly states that both positive and negative reviews must be
published as they are, unedited. Although positive feedback can give your
advisory business a boost, it’s important to maintain compliance with the SEC
and any other applicable regulations, as well as be prepared to counteract
potential negative feedback. Although no professional desires negative
feedback, not all negative reviews are bad. Sometimes, this is an opportunity
to find out where you fall short, and show customers that you have taken action
to remedy any previous challenges. In some cases, the story of turning an
unhappy customer into a happy customer makes the best review.
All
information provided in this blog is for informational purposes only. The
sources used are presumed accurate. CalSurance Associates, Brown & Brown
Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable
for any errors, omissions, losses, injuries or damages arising from its display
or use and will not assume responsibility for any misguided information. No
guarantees are implied.
