Online reviews are commonly given and used by consumers across many industries, from finding a good restaurant in a new town to reviewing a lawn care service provider. Nonetheless, fewer than 10% of SEC-registered investment advisers report using them, even though the SEC’s updated investment adviser marketing rule allows financial advisors to proactively encourage testimonials (from clients), use endorsements (from non-clients), and highlight their own ratings on various third-party review sites. Which suggests that advisers have an opportunity to leverage the power of online reviews, which can act as “evergreen referrals” and drive more prospects to seek out the firm’s services, all while adhering to their firm’s compliance requirements.
While some advisors might be concerned that reviews they encourage clients to make on the firm’s Google Business Profile could be seen as advertisements (creating additional compliance requirements), the language of the rule (and the SEC’s stated intent behind it) suggests that by providing all clients an equal opportunity to leave candid feedback on a Google Business Profile would not in and of itself turn that content into an advertisement (unless the content was later endorsed or approved by the adviser). However, selectively asking a subset of clients for testimonials, or guiding their responses to encourage more positive content (involving themselves in the preparation of the content), would likely result in the content being considered a communication of the adviser, potentially rendering it an advertisement subject to the disclosure and compliance requirements of the marketing rule.
Even though the updated marketing rule has enhanced advisers’ ability to leverage online reviews, some advisers might wonder whether clients will actually leave reviews (and, if, so, whether they will be positive). However, an analysis of thousands of Google reviews from financial advisory firms around the country shows not only that clients are willing to leave reviews (particularly if the firm has a proactive strategy for review generation), but also that firms with the most reviews tended to have higher than average ratings for advisory firms overall. Further, advisers tend to have higher ratings than businesses in other industries (perhaps reflecting the financial planning industry’s high retention rates and ability to make a difference in clients’ lives!).
To create an effective (and compliant) Google review strategy, a starting point for advisers is to update their Form ADV to reflect the use of testimonials and their Policies & Procedures to govern their approach to collecting, approving, and sharing testimonials. Next, by taking a proactive approach to reinforcing where they add value (e.g., because the most enthusiastic testimonials related to clients feeling like their adviser was delivering a personalized plan, advisers who address client concerns directly and make them feel a part of the process could generate more positive reviews). Further, advisers can potentially reduce the number of negative reviews received by ensuring that prospect and client relationships that do not work out (e.g., when a prospect does not meet the firm’s asset minimum) are handled respectfully (e.g., by referring the prospect to another advisor who might be able to better meet their needs) so that the individual does not feel compelled to leave a negative review.
Ultimately, the key point is that the SEC’s updated marketing rule provides advisers with the opportunity to boost their online reputation through the use of online reviews. And by taking a proactive approach (both to encouraging reviews and to meeting the rule’s requirements), advisers can potentially increase the number of inbound prospects they attract while remaining in compliance with the marketing rule’s requirements!
