Technology Landscape. 3 Types of Advisor-Client Texting Solutions for Financial Services

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1 Technology Landscape 3 Types of Advisor-Client Texting Solutions for Financial Services

2 INTRODUCTION Financial services firms text their customers for a number of different reasons, and many already have corporate-driven texting programs in place. These programs might include sending automated security-related notifications like password resets and two-factor authentication, account and policy alerts, and for texting-based marketing and promotional campaigns led by the firm s corporate marketing team. Advisor-driven texting initiatives, while less common, are becoming increasingly critical for any firm that hopes to remain relevant and meet the ultra-personalized expectations of today s digital-first consumer. WHY FIRMS NEED TO ENABLE ADVISOR-CLIENT TEXTING As an industry, financial services has fallen far behind in technology adoption. Consumers nowadays rarely answer their phones, yet advisors still rely on cold-calling. Advisors also waste a significant amount of time going back and forth with clients on administrative tasks like trying to set up a meeting or acquiring missing documentation tasks that can be completed in minutes if done via more instant channels such as texting. The implications are substantial, and a firm stands to lose a substantial amount of business as well as advisor productivity if advisors can t easily and quickly reach clients, and vice versa. The ability to promptly notify a client about a payment or policy change, confirm a meeting, or send a birthday or anniversary message all can be accomplished with a simple text. Texting also can help advisors accelerate the rate of developing and nurturing client relationships. A recent study found that advisors who text have, on average, 23 percent more interactions with their clients than those who don t 3. These additional touch points are critical to staying top of mind, building client loyalty, and ultimately bringing in more business. average text response rate in financial services minutes Compliance is another important reason why a firm should enable advisor-client texting. Research suggests that more than 50 percent of advisors are already texting clients, putting themselves and their firms at risk 4. In April 2017, the Financial Industry Regulatory Authority (FINRA) released new guidance on advisor-client digital communications, including text messages. This suggests that regulators are taking a closer look at advisor texting. 80 % Lastly, advisor-client texting, if recorded in a systematic way, can be a key channel for providing a holistic view of client interactions. Records retention laws create a big advantage when it comes to data analytics and aid data-driven workflows. But this is only possible if firms start collecting client interaction data across all digital channels. average customer opt-in rate for advisor texting programs in financial services 2 1

3 THE ROLE OF INFORMATION TECHNOLOGY At many financial services firms, IT management is responsible for texting solutions that will serve the entire company, across multiple functions. This approach makes sense, but in practice often overlooks how well these solutions serve the advisor community, who are the main relationship managers and revenue drivers for the business. Texting technology should be assessed with the advisor in mind. If advisors don t use the technology, the main objective of being able to text customers to provide personalized, superior service is greatly diminished for the firm. This technology landscape report focuses on three different solution categories available today specifically for advisor-client texting in financial services, and how they compare against each other. number of advisors who report their firms have rolled out a texting program 5 SOLUTION TYPES A firm looking to implement texting technology for advisors usually takes one of three approaches: In-house solutions that are custom-developed by their own IT teams, often used to fulfill objectives from multiple functional areas within the firm. Compliance-first solutions that aim to enforce policies that govern the conduct of employees and to abide by industry regulations (for example, an ability to archive all text exchanges). Advisor-client engagement solutions that focus on the firm s business needs, particularly client loyalty and satisfaction at the advisor level. The rest of the report focuses on evaluating these approaches against seven key criteria that will be important to any firm. EVALUATION CRITERIA The seven key criteria below will help a firm determine which solution type makes the most sense for its current needs as well as in the future. In numerous requirements conversations, these criteria continue to emerge from owners of the texting program and their business needs, as well as from IT stakeholders and their technology needs. How does the platform perform against factors like uptime and adherence to service level agreements (SLAs)? Does it have the ability to provide national mobile coverage that is carrier-agnostic? How much time is needed to implement the solution? Can it integrate with existing systems, and how long will that take? What are the costs associated with this solution, including maintenance and operations? Can this technology be managed within an existing mobile policy for advisors? How much change management support will be needed for advisors use the platform? Does the technology contain the features needed to meet specific regulatory requirements? Can it evolve with regulatory changes? Will the addition of new technologies, vendors and/or use cases increase or decrease the firm s security position? How extensible is the solution? Can it plug into emerging channels, such as WeChat, WhatsApp, etc., in the future? Does this solution solve for as many IT feature requests across as many use cases and internal departments as possible? 2

4 SOLUTION EVALUATION IN-HOUSE SOLUTIONS Because the platform will be built internally, an in-house solution can be customized and developed most consistently with the firm s internal technology guidelines. To maximize cost efficiencies, in-house solutions tend to gather similar requirements across various stakeholders, and this might result in a sub-optimal solution for an advisor-client texting program. The IT team building in-house technology typically has several projects and needs justification for investing time, budget and prioritization of a project. These additional factors may extend implementation time. In-house solutions usually have no ongoing roadmap to update functionality, which means systems can eventually become outdated. In addition, the cost of maintaining these solutions are often much larger than the initial cost to build them. As a rule of thumb, around 70 percent of the cost to develop a custom solution is then needed year after year to maintain it. 6 IT generally will build custom solutions based on internal architecture and technical compatibility firm-wide, focusing on the technology first and then defining use cases and policy later. In addition, the IT team often delegates onboarding and ongoing support to the business unit(s) that requested the functionality. Developers of in-house platforms usually work closely with the legal team, so alignment on legal and risk requirements should be strong. Generally, in-house solutions are built for existing pain points and may not take into account future extensibility. Any new technologies that emerge in the future will likely need to be scoped and costed out by the IT team as a new project, which will have new cost and time implications for the business unit. When developing internal solutions, IT teams tend to focus on the most requested features and common functionality across business groups. Since texting can cover a broad range of use cases, including corporate-driven texting and advisor-driven texting, this could be an issue for advisor usability, leading to overall lower adoption. 3

5 SOLUTION EVALUATION COMPLIANCE-FIRST SOLUTIONS Many compliance-first solutions are carrier-dependent, which can lead to spotty coverage, lower uptime and overall poor client experience. It is also advisable that firms check the use cases supported and the ability to scale to the required number of advisors. Compliance-first solutions may require installation and involvement of the in-house IT team, and if so, are subject to the same timing issues. Support and upgrades are usually built into the cost as a standard software-as-a-service (SaaS) offering, which gives a firm a more accurate picture of overall, total expense over time. Because compliance-first platforms are built to minimize firm risk, high adoption and usage by the advisors and their changing needs often aren t a priority. Moreover, advisors will only adopt a technology if it helps them grow their business. This results in a higher level of change management support for the field. Compliance-first solutions are quick to adapt to new and evolving regulations. The recent changes to the Department of Labor (DOL) ruling in the U.S., or the implications of the Markets in Financial Instruments Directive (MiFID II) for global firms, should be well understood and incorporated into the platform capabilities. Since compliance-first solutions are built for protection and governance, the ability to easily and quickly integrate with emerging communication channels (that may or may not become popular) is often not a high priority for compliance-first solutions. Compliance-first solutions focus on serving and meeting the needs of compliance teams, prioritizing features that are dictated by regulatory changes. Hence, support for capabilities beyond compliance may be limited. 4

6 SOLUTION EVALUATION ADVISOR-CLIENT ENGAGEMENT SOLUTIONS Advisor-client engagement solutions are carrier-agnostic, which generally results in better mobile coverage across the board. If they are SaaS based, then they typically adhere to industry-standard service level agreements (SLAs) for uptime. As in compliance-first solutions, it is recommended that firms evaluate how scalable the platforms are to be deployed in large enterprises. Advisor-client engagement solutions are usually turnkey and require minimal integrations with existing IT infrastructure. Support and upgrades are usually built into the cost as a standard SaaS offering, which gives a firm a more accurate picture of overall, total expense over time. The success of an advisor-client engagement solution relies on high advisor adoption and usage, which means the technology should be well aligned with the field s business needs. These solutions also often come as part of a broader training and engagement program that helps drive advisor adoption. If built with the financial services industry in mind, advisor-client engagement technology should mitigate risk holistically while ensuring less friction for advisors. Since engagement is at the core of this category, advisor-client engagement platforms typically are up-to-date on new communication technology in the market and what advisors and their clients need, and can build new functionality based on demand and business value. However, they are dependent on third-party API availability. Depending on the maturity of the vendor, advisor-client engagement solutions can support one department s use case, or across multiple departments. 5

7 CONCLUSION Financial services firms are constantly looking for opportunities to deliver the type of personalized, on-demand communication that investors prefer, and texting has emerged as a critical way for advisors to communicate with their clients. An in-house solution is ideal for a firm that knows its advisors really well and has the necessary resources to support those needs. A compliance-first solution is best for a firm on a limited budget that wants to check the box on unlocking texting as a channel for its advisors, but is most concerned about ensuring compliance. Accommodating specific use cases beyond compliance is not a priority. An advisor-client engagement solution is best for a firm that wants its advisors to be more productive and to grow client interactions, but either does not have the resources to internally build a solution, or wants to find an industry-specific partner that has built-in best practices that help drive compliant client engagement. In a world where social, mobile and digital technologies permeate every aspect of life and work, IT has a critical leadership role to play. Clara Shih, CEO, Hearsay Author, The Social Business Imperative ENDNOTES 1 Hearsay data, Hearsay data, Hearsay survey, Hearsay survey, Aite Group survey, Kave Corporation, 2013 Hearsay Systems offers the Advisor Cloud for financial services, empowering advisors to efficiently and compliantly use social media, websites, text and to engage with customers, build stronger relationships and grow their business. Its prescriptive technology processes and prioritizes data from across digital channels and data systems, providing actionable suggestions for advisors on how they should engage with customers next. Built for the enterprise, Hearsay connects these advisor-client interactions and data to corporate CRM systems and digital marketing programs, and provides efficient compliance supervision and review workflows all on a secure, enterprise-ready platform. CONTACT@ HEARSAY SYSTEMS, INC. 6