It has been over 40 years since significant changes to "The Investment Advisers Act" were adopted. To say that advisors are excited about this recent update is definitely an understatement. With all of the different communication and social media platforms available to advisors, they are eagerly looking forward to sharing testimonials with potential clients hoping to open new doors of opportunities.
Firms and their compliance departments need to take a proactive approach when it comes to addressing these new marketing updates. Testimonials and endorsements still need to be monitored and approved to ensure they are not misleading investors. Firms need to decide what types of statements they are going to approve, what platforms will be utilized, and how registered advisors are going to notify them and gain approval before any endorsement is published.
Initially advisors will want to add these testimonials and endorsements to their websites and other online destinations that may or may not be monitored by compliance. Demands on compliance’s time for monitoring and approvals will certainly increase. Additionally, firms need to reevaluate their disclosure policies to ensure that advisors provide notification and documentation of what and where they wish to publish testimonials and endorsements online.
Compliance departments should expect to see a large increase in their workload related to internet monitoring and approvals that need to occur. What will compliance do to monitor endorsement and testimonial platforms such as Yelp, Google Reviews, or social media platforms like Linkedin, Facebook, and Twitter? Advertisements that include third-party ratings will be required to include specific disclosures to prevent them from being misleading.
Is compliance waiting for advisors to disclose everything? Are policies based entirely on the honor system? How do you discover your advisor’s online presence, including these new testimonials and endorsements if they are not disclosing them to compliance?
While you are forming your compliance strategy and updating policies, procedures and workflows it is important to consider how and what technologies can assist compliance with this increased workload. As the SEC and FINRA are adapting to new technology, compliance departments need to evolve and rely on innovative technology as well to support their job requirements.
For over a decade, SiteQuest Compliance has continued to be a trusted partner, supporting compliance and supervision departments with tools that can help meet these increasing demands with regards to compliance and supervision.
Our Eagle Eye solution uncovers and supervises your advisors’ online footprint. It discovers social media accounts, websites, blogs, yelp pages, OBAs, DBAs, and online profiles, allowing you to address issues prior to regulatory discovery or examination.
Our SQWatcher platform monitors and archives advisor websites including those that may be hosted by non-approved website providers. It creates historical records of these sites, creates workflow events of specific types of changes like new pages, changes to readable text, images, and more with customizable rules to meet your needs.
This update to the Investment Advisers Act will require your firm to revise its policies. Our newly launched Policies solution is a powerful tool used to organize, version control, and distribute your firm’s policies and Written Supervisory Procedures (WSPs) to your employees and advisors. Ensuring that your advisors always have access to your most current policies with easy to search features.
As your advisors are “Modernizing their Marketing Practices” contact us today to discuss your specific needs and concerns. Let us show you how we can help streamline your workflows to maximize your time, while helping to ensure you don’t miss anything with regards to internet and website supervision and content approval.
Sources: https://www.sec.gov/news/press-release/2020-334 | https://www.sec.gov/rules/final/2020/ia-5653.pdf
WHAT IS SQWATCHER?
SQWatcher monitors and archives advisor websites that may be hosted by non-approved website providers. It creates historical records of these sites, creates workflow events of specific types of changes like new pages, changes to readable text, images, and more with customizable rules to meet your needs.
WHY DO YOU NEED IT?
SQWatcher supports your firm’s adherence to regulatory requirements like FINRA Rules 2210, 3110, 3120, 4511 and 4550 by actively supervising these websites for unapproved changes and providing historical archives of the site.
YOUR RETURN ON INVESTMENT
SQWatcher’s powerful workflow review processes along with dynamic crawler technology allows your firm to monitor and document dozens to hundreds of websites with relatively few employee hours involved. It reduces compliance and “failure to supervise” risks while demonstrating to regulators, your firm is actively supervising these unique websites in compliance with FINRA and SEC rules.
Schedule your personalized demo today!
FINRA recently sent out Regulatory Notice 20-30 regarding an increase in imposter advisor websites being created with malicious intent. These fraudsters are also calling and directing potential customers to use these imposter websites. Additionally these imposters may be using these sites to collect personal information from potential customers with the likely end goal of committing financial fraud.
According to FINRA, some common features of these websites include:
FINRA suggests that “Member firms and registered representatives can take steps to identify these pages by conducting periodic web searches using registered representatives’ names.”
The potential damage of an Imposter Website could be irreversible. What can you do?
Eagle Eye by SiteQuest Compliance has everything you need to monitor the internet and discover imposter sites and other compliance threats to your firm. Our multi-query processes, lexicon searches and dynamically designed algorithms provides more accurate search results saving you time and automatically alerting you to new search results concerning your registered representatives’ identity.
Additionally, our system considers the domain name as it searches for results and scores them for potential reviews.
Our easy-to-use workflows allow you to quickly review dozens to hundreds of search results in minutes. Many of our clients have found that with Eagle Eye they cut their workload by 80%.
If you do discover an imposter website contact FINRA and the FBI immediately.
See for yourself how Eagle Eye will support your compliance and supervision programs to monitor the web and discover these types of issues and more. Contact us today for your personalized demo.
Eagle Eye also supports your firm’s adherence to regulatory requirements like FINRA Rules 2210, 3110, 3120, and 3270 by providing supervision of the internet.
Read the Entire Regulatory Notice 20-30
Let’s face it, the coronavirus pandemic has fundamentally changed the way we do business. Most of our industry is working from home, learning to balance conference calls and kids with questions that just can’t wait or dogs that must bark while on a Zoom meeting. We’ve all been there and have our moments.
Other things have changed as well, especially when it comes to marketing and advertising. This is especially true for financial advisors who have lost the ability to connect with clients at events, lunches, in office or at home meetings or simple introductions that come from face-to-face interactions. or years, many advisor’s businesses have primarily depended on these methods to connect with current clients and meet new prospects. Social distancing and stay at home orders have eliminated these options for many advisors who are now exploring new options to prospect and connect with people.
So where are they turning? Like everyone else, advisors are turning to technology to increase their online presence with updated profiles while sharing fresh and timely content.
I recently spoke to some of our clients about trends they were seeing regarding their advisor’s marketing and advertising behaviors since social distancing and stay home orders began. One compliance manager told me his firm has seen a 30% increase in advertising submissions as well as a significant increase in the use of approved social media sites like Facebook, LinkedIn and Twitter.
Another client told me, “Advisors have ‘downtime’ and are now thinking a lot about marketing.” I followed up on how things have changed for our client as a result. “Don’t get me started on how much social media usage has jumped since this all began!” They have seen an increase of 25% to 30% in usage and a surge in new accounts being created by their advisors.
Social Media usage is certainly on the rise. A recent survey showed that 32% of Americans said they have increased the amount of time they are using social media sites like Facebook and Twitter.
Another firm told me that advisors who have typically shied away from social media, online profiles, websites, and other marketing technologies are now diving in for the first time. I was told, “Their (advisors) traditional lead generation tools aren’t available anymore. They now have time and are focusing on new ways to build their business.”
Additionally, our clients are seeing a big increase in advertising submissions for recordings from Zoom/online meetings. Advisors are continually seeking guidance on additional options for communicating and marketing to the public.
This all presents an increasing challenge in supervision and compliance, especially when there are growing limitations on human resources.
That’s where our Eagle Eye technology comes in. Eagle Eye helps our clients uncover their advisors’ web presence, locating social media accounts, websites, articles, profiles, videos, OBA’s and more. Eagle Eye creates automated documentation of what has been reviewed, who did the review, and what the website looked like at the time of review, giving our clients and regulators a complete picture of the process. They use our system to discover and “clean up” situations where the use of these sites was done without approvals or monitoring in place.
Another one of our clients shared with us that, “Thanks to Eagle Eye, it is helping me identify and address issues before they are brought to my attention by a regulator.”
With our industry evolving, SiteQuest Compliance is a preferred partner when it comes to internet supervision and website management.
Contact us today for your personalized demo where we can discuss your supervision concerns and see for yourself how Eagle Eye can support your internet supervision requirements.
This spring FINRA announced the formation of the Office of Financial Innovation that will serve as a central point of coordination for issues related to financial innovations by FINRA member firms, particularly new uses of financial technology.
The goal in mind to further enhance FINRA’s ability to identify, understand and foster financial innovation in a manner that strengthens investor protection and market integrity.
With 10 years of experience supporting our partners in their supervision and compliance with FINRA, SiteQuest Compliance is pleased about the dedication to financial innovation.
SiteQuest Compliance has a long standing tradition of being a thought-leader. Working side-by-side with customers as we develop and improve our supervision applications to meet their needs. As more and more regulation burden is being put upon financial firms, SiteQuest Compliance is stepping up and serving as a trusted partner. Learn more about our applications.
Eagle Eye is the first of its kind application that uncovers and supervises your advisors’ online footprint. It discovers social media accounts, websites, blogs, OBAs, DBAs, online profiles, and events that belong to or are about your advisors, allowing you to address issues prior to regulatory discovery or examination.
SQWatcher stands for our SiteQuest "Watcher". Our SQWatcher application monitors and archives advisor websites that may be hosted by non-approved website providers. It creates historical records of these sites, creates workflow events of specific types of changes like new pages, changes to readable text, images, and more with customizable rules to meet your needs.
Policies organizes, manages and delivers your firms policies and WSPs. Our Policies application provides a clean, easy-to-use, easy-to-search and up-to-date experience for your advisors. Policies brings all of your procedures, policies, WSPs and other documentation into one place that can be accessed on both a desktop and mobile devices.
Our customers have referred to our applications as “force multipliers” that exponentially expand their search and supervision capabilities. Firms are able to identify and address issues before they are brought to their attention by a regulator.
“Innovation continues to pose new opportunities and challenges for our member firms and the broader financial services industry, and it is essential that we as regulators keep pace,” said FINRA President and CEO Robert W. Cook.
With the even increasing trend for registered advisors to utilize technology to grow their online presence with updated profiles while sharing fresh and timely content. It is paramount that supervisors have support and a partner to help them with their ever increasing responsibilities.
Let us show you how we can help. Contact us today to discuss your supervision challenges. Together we can lay out a plan to keep pace with technology innovations.
2020 is a big year for us as we are celebrating 10 years of compliance partnerships. There have been many significant changes in supervision over the past 10 years, especially with an increase in workload and scope for online supervision. Trying to stay compliant with the FINRA 3110 Supervision rule can become a daunting task as the web offers an easy to use and often free resources for advisors to get their name and practice out in the public eye.
As YOUR compliance partner, we’ve observed several interesting trends that we expect to see increase during 2020.
With the increase in online articles being published on blogs, websites, and social media sites like Linkedin, many advisors are writing, being mentioned, and even cited in third party articles. We continue to see these occurrences with very little if any disclosure information and perhaps is not considered pre-approved content.
Have you heard of Quora? Quora is an online question and answer platform. 775,000 people use Quora monthly to ask questions. This is a large audience that advisors have the ability to connect with. They can publish content, answer people’s questions, and search for specific topics that relate to your industry. BUT how do you know if your registered advisors are using Quora?
Yelp is another online platform that is continually growing in popularity. The Securities and Exchange Commission recently charged three advisers and a marketing firm for violating the testimonial rule by promoting their business on Yelp. Over 4.6 million businesses are using Yelp. With 163 million Yelp reviews, how are you to know if your advisors are actively soliciting testimonials from their clients?
Adding to your monitoring struggle is YouTube. It is estimated that over 300 hours of video are uploaded to YouTube every minute! There is an increasing trend in people publishing personal video and vlogs related to their business. With over 1 billion daily users how are you to find videos uploaded to YouTube by your registered advisors if they don’t send you the direct links?
Advisors can create non-monitored social media accounts. How do you know if your advisors even have a social media account if they don’t tell you about it? How do you find these social media accounts?
One of the biggest trends that we see continuing into 2020 are the use of DBAs. FINRA observed that “certain firms were not maintaining sufficient WSPs and controls, or providing adequate disclosures regarding the use of DBA names.” Outside business activities and unauthorized content from your registered advisors are a growing concern that will always be present. What controls does your firm have in place to aid you in discovering these DBAs if your advisors are not disclosing them? How do you know what your advisors are putting online using their “DBA” name?
Your time is valuable. Any search engine can produce an endless amount of meaningless results that need to be reviewed. Our Eagle Eye application is designed with built-in intelligence that sifts through the web’s clutter and brings the most relevant results to your attention. Our multi-query processes and dynamically designed algorithms provide more accurate results for a quick review process. In addition to our search results our automated screenshots feature helps you document, report and escalate any issue that is brought to your attention.
One of our clients said :
"The Eagle Eye Surveillance system has been a force multiplier in my firm’s supervisory scheme. This simple tool has transformed my internet surveillance sweep process from a time-consuming, multi-day enterprise where I view the same search results over and over to a simple process that can be completed in a couple of hours."
Another one of our clients said:
“As soon as we implemented Eagle Eye, the system found searches that were previously missed with the manual process and as a result, we updated our policy and procedures to minimize compliance risk. Also, one of our previous hurdles was demonstrating to our regulators with documentation that we were conducting the appropriate monitoring but with the audits reports, that are available directly from the system, we are able to document and show individual findings in an organized manner."
You can minimize your risk and address these growing trends by utilizing our Eagle Eye application.
Contact us today for your personalized demo of how our application with work for YOUR firm.
The “Communications with the Public” Rule FINRA 2210 states that “an appropriately qualified registered principal of the member must pre-approve each retail communication before the earlier of its use or filing with FINRA's Advertising Regulation Department ("Department").”
“Retail Communications” include all electronic formats as well.
In addition to supervision approval:
“Each member shall establish written procedures that are appropriate to its business, size, structure, and customers for the review by an appropriately qualified registered principal of institutional communications used by the member and its associated persons. Such procedures must be reasonably designed to ensure that institutional communications comply with applicable standards.”
Our Eagle Eye and SQWatcher applications support your compliance program when it comes to complying with this rule.
Our innovative Eagle Eye application will search the internet and allow supervisors to identify and discover your registered advisors’ online presence. Our multi-query processes and dynamically designed algorithms provide more accurate search results for supervisors to quickly review.
With our automated documentation and reporting features, you will have everything you need including when a result was found, who reviewed it, comments that were made and timestamps on every action taken during the online supervision of your registered advisors.
SQWatcher will supervise and archive all websites, even those not hosted with your approved providers. It will organize web-page changes into a manageable, easy to use workflow. Automatic triggers based upon your requirements will notify you of pending reviews.
These products were developed for the compliance supervisors who are looking for automated solutions to replace manual processes that prove to be ineffective and tedious.
Note: NASD Rule 2210 has been superseded by FINRA Rule 2210.
About James Cella
James Cella is the President of a growing and innovative compliance technology provider called SiteQuest Compliance. James is a customer-centric individual and focuses on building and sustaining positive and lasting relationship with his clients and partners. James and his family are "super fans" of University of Utah Football and have attended nearly every home game since 2002. Go Utes!