SIFMA Chief Operating Officer, Joe Seidel, recently sat down with Shane Closser, Head of Industry, Yext, for a one-on-one conversation on how financial advisors can grow AUM with modernized advertising and solicitation rules. This is an excerpt from their conversation, one in a series of Executive Viewpoints at SIFMA’s 2021 Annual Meeting.

About Executive Viewpoints

Filmed for SIFMA’s 2021 Annual Meeting, Executive Viewpoints is a series of insightful conversations about trends and innovations shaping the future of our capital markets. The capital markets are in the midst of major transformation, arguably one of their most fundamental shifts yet. In this special series, SIFMA president and CEO Kenneth E. Bentsen, Jr. and chief operating officer Joseph Seidel interview a cross-section of experts to understand just some of the dynamics at play in the market’s next evolution.

To view more from the 2021 SIFMA Annual Meeting, please visit www.sifma.org/annual.

A Conversation with Shane Closser

Joe Seidel: Earlier this year the SEC announced a new rule which for the first time allows financial advisors to proactively use testimonials, endorsements, and highlight their own rating on various third-party review sites. How does that new rule allow you —or what does that new rule allow you to do that you couldn’t do before?

Shane Closser: We had rules provided by the SEC, so the Marketing Rule, the 206 Rule. FINRA had already kind of come out with some of their own updates, right, so the FINRA 2210 Rule. There was a lot of confusion within wealth management on some of the rules conflicted with each other on what you could do or what you couldn’t do. A lot of these wealth firms out there had a hybrid or dual registry advisors. That confusion didn’t help either. The stance for most firms was just not to allow financial advisors to engage in reviews.

Now at the same time, across every single other industry within financial services—mortgage, retail banking, insurance—reviews have been the fastest-growing demographic out of any other industry, like we’ve seen huge adoption in these industries within financial services for reviews. That’s because customers are using reviews to make these important life decisions in their lives. How do I save for retirement? What do I do when I lose a loved one? I have children now.

They are looking for financial professionals that can meet their unique needs in these markets. They’re using these reviews and these testimonials as a source to inform that purchase decision. With the newly updated ruling, which we’ve been waiting for a long time, since 1940, the financial advisors can generate reviews. They can respond to reviews. Obviously, there’re some stipulations around that; we can get into that a little bit later.

Joe Seidel: Reviews are a tool very commonly used obviously by consumers in their decision-making processes around everything. I would bet you virtually everyone on this call looks at the review when they’re going to restaurants, picking a plumber, doing any number of—looking for a new barber, or any number of things in town. It sounds like that’s a really good thing, quite frankly, that will benefit the consumers in the financial industry.

In the context of advisors, why is this new ability to use reviews so important, and how can the reviews help grow and retain a client base?

Shane Closser: We’ve been [polling] consumers for several years now about the importance of reviews. In the context of wealth, we’ve seen—when we ask an [unintelligible] [respective investor] an important touchpoint they have that informs their purchase decision, it’s always the referral, right? The referral is still number one, by the way, so it’s not going away, talking to a financial advisor being number two. Reviews have always been number three, which is really interesting.

When we did this research a few years ago, we would see a 20 percent difference between talking to an advisor and actually looking at reviews. Now it’s only a two percent difference. There’re more things that matter to be successful today is what that tells us. Consumers are more discerning around where they’re going. They have more choice, first of all, and they’re more discerning around whom they’re going to trust with their money. 80 percent of consumers say it’s not only important but extremely important for— reviews are extremely important in that purchase journey.

The other thing for financial professionals out there, within financial services, they have the highest rating reviews of any other industry with a 4.02. I always like to say the water’s warm in that pool, right? There’s not a lot of things to be intimidated by. It’s making a bigger role in the referral. A lot of people are getting referrals, but they don’t understand why people aren’t calling them anymore.

What’s happening is they’re going online and fact-checking you. If you have that one star out there, even though you’re getting this really strong referral, it’s now kind of a three-step process instead of a two-step process for referrals. That’s another interesting tidbit that we’ve seen in our research.

Joe Seidel: Walk us through the different ways an advisory can use reviews. What is the most common approach you see?

Shane Closser: There’re a hundred-plus places out there that people are leaving reviews about. Google, Facebook, Yelp. Now you can do it on your own website, which is great. That can be daunting and intimidating. The first thing is to use technology to say, across all of these touchpoints, here’s your reputation score, right, that 4.02 star, which is really, really good. Monitoring is the number one thing everybody should be doing.

Even before these rules, FINRA and [both] the FCC have always said that you should be doing that. You should be doing that to prevent fraud out there because people could be leaving other things out there like calling my phone number. Definitely number one. Number two is generating reviews. As we’re having these new meetings—new clients, new investor meetings, as we’re meeting with our clients and doing these quarterly business reviews or annual business reviews, it’s a great opportunity to generate that review.

It’s how have I been doing? We’ve been using that for [NPS] forever now. We have not been doing that for reviews. The generation is really important. We see a one-star improvement from having automatic generating capabilities. When they come in, just automatically send that response out. That can improve your overall star rating by one percent. Responding to reviews is number two. Taking those reviews and really using that to amplify your brand and market is the last one.

Having reviews on your website [will] improve your discoverability. You can use it as a trust signal in your marketing materials. We’ve used the quote-unquote testimonials for quite a bit. This—with the proper procedures and controls, obviously that, working with your compliance team around this, that these are the new capabilities that everybody should be engaging in.

Joe Seidel: Financial advisors, marketing professionals, and compliance officers all look at this new rule through the lens of their specific functions, which is natural. What do each of them need to know about reviews?

Shane Closser: We actually developed a checklist. On our website, we’ll have a lot of this. But I’ll give you some of the key points. So as a compliance team, you do need to make sure that you have the proper controls, right? So if it’s a new client, you’ll want to make sure that you have the proper disclosures around there. You want to make sure you have a policy. There’re some great policies out there.

We can point you to some of those resources [as a] starter kit for what are some of these things that we need to do to kind of set some standards in our organization to show that we are having these controls and the proper supervision around these programs. There’s a lot of reporting n workflows that [as] the clients seem to want to think about, right? There’re a lot of options on what you can do around that.

From a marketing team’s perspective, it’s really, do we want to go with canned reviews? So we don’t want people creating custom reviews. A safer place to start because you can get compliance to reviews those and [so it’s] a nice way to automate some of that. Who’s going to be doing the responding? The financial advisor, the CSR that might be working with the team of financial advisors. Marketing might want to start with a centralized model, then move to a more decentralized model over time when they’re more comfortable about it.

They might want to think about certain populations that they start to pilot this list. There’re a lot of decisions there. Ultimately, there’s a lot of education for financial advisors around the [importance] of it today to improve that discoverability in market, to improve their brand in market. There’s a lot of things that they can do grow their book and retain their book, especially as we start thinking about the transfer of wealth, right?

There’re these industry metrics as people pass money to their heirs, only two percent of those heirs stay with their parents’ financial advisor. If you’re using some of these more modern techniques, that could really help with that. We also see there’re a lot of new demographics around the transfer of wealth that we need to go after. It would be great to get some of that advocacy for those demographics, new women heads of household, et cetera.

Then if we kind of teach them how to leverage that. They can kind of untap some of the opportunities that they need in [the book].

Joe Seidel: Now I’ve heard the term referred to as a first-party review or a third-party review. Can you explain what the difference is between a first-party review and a third-party review?

Shane Closser: There’s a lot of confusion around [laughs] this. So first-party reviews are reviews that you’re collecting as an organization. I will take those first-party reviews and I will put those on my website typically as the common use case. Third-party reviews are a lot of places that people can leave reviews around you, but you don’t own those properties, right? We think of Facebook, Google, Yelp, WiserAdvisor.

There’re a lot of affiliate marketers out there that are specific to wealth. [Wealthtender] is a new one that’s just popped up recently, too. Those are the third-party reviews and there are more limitations on what you can do with third-party reviews. My recommendation would be to start with the first-party because all those disclosures, you can’t respond to some of the stuff, you can’t generate for it yet. There’s a lot of confusion around that.

I would definitely get people to really focus on the first-party reviews, which are clearly approved.

Joe Seidel: What impact does the ability to use reviews—what has it had in terms of impact on regulated financial services or the insurance industry? The ability to use reviews, sorry.

Shane Closser: I’ll talk about it in the context of what we see more broadly within financial services, [unintelligible] newer to wealth. What we’ve seen is if I look at reviews where there’re financial professionals and they’re making really important financial decisions. Typically, I would look at wealth and I would look at insurance for that. In 2020, we saw a hundred percent increase in review adoption. People started to go out there and adopt these review strategies because they realized it’s important for being discoverable where consumers are.

Last year—so it’s 90 percent—in 2020, and a hundred percent this last year. So it’s trending up. What we’re seeing is more people are leaving reviews, right, for those various different places. We’ve seen about a 40 percent increase in review volume. People leaving [more] reviews. More people are doing it, and more people are leaving those reviews.

We’ve seen that 4.08 kind of average star rating, which is pretty good. I’ve talked about the water being warm. Feel free to jump in. It’s not so scary, even though I know it kind of can be daunting and intimidating. We’ve seen that a lot of financial professionals are responding to reviews quickly. That’s really important, right? So if you respond to reviews, you can change those one-star reviews to a five-star because you’re remediating that. The quicker you do that, the greater chance you get that five-star.

What we’ve also seen is about a 45 percent improvement in their local market discoverability. I’ll talk about that for a second. As I go to Google or any place out there, all these search sites, these social sites, these voice sites that exist, and I say find the best financial professional in retirement, in [ET]—whatever it is that I’m looking for, you will start to rank more highly [in a] vertical market by using your review strategy.

45 percent improvement in discoverability? It’s like one of the best things that you can do to get that ROI, return on investment, to increase your brand out there, and make sure you control the narrative versus others controlling the narrative, even about yourself out there. There’s a lot of random blogs and other kinds of things that are going on, and you could suppress a lot of that content and making sure you’re owning [that] experiencing and curating that experience and driving them to your phone number or your address, the right way to contact you.

Joe Seidel: What resources are available for teams to understand more about how this works and to learn more about Yext?

Shane Closser: You can go to Yext.com. There you can click on Solutions and go to Financial Services. Specifically, we have something we call Reputation Management. So we have blogs out there. We have a lot of these checklists, a lot of the industry stats, and a lot more are posted out there. So feel free to use that and register for your demo. I’ve also included my contact information.

Watch the Full Conversation

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Shane Closser is Head of Industry of Yext. He leads the financial services business segment including strategy, marketing, product, and GTM partnerships.

 

 

Joseph. Seidel is Chief Operating Officer of SIFMA. He manages the day-to-day operations of the Association, including core legal, regulatory, business practices, public policy and communications activities.