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Stay ahead of compliance regulations and make them a competitive advantage for your financial advisory firm. The U.S. Securities and Exchange Commission (SEC) mandates that registered financial advisors maintain comprehensive records of their communications related to their advisory services. The Investment Advisers Act of 1940, SEC Rule 204-2, and other laws have been put in place to ensure that all client interactions are transparent, therefore protecting investors and the market. As both regulatory environments and communication technologies continue to evolve, there’s high potential for the SEC to broaden its archiving requirements. The rise of instant messaging, social media, and other digital communication platforms has already prompted discussions around expanding archiving requirements. The ongoing trend suggests that the SEC could instruct advisors to include even more forms of communication in their recordkeeping practices.
While it may take the SEC some time before introducing new requirements, more and more wealth management firms are looking ahead in anticipation of what could come, particularly when it pertains to the potential for virtual meetings to be treated like phone communication and archived in transcript or post-call note form. Financial advisors who proactively adopt comprehensive and forward-looking archiving practices may find themselves ahead of the curve, positioned to meet future regulatory demands without significant disruption to their operations—and to discover untapped opportunities today within their archived data.
The opportunities in archiving client communications
If compliance regulation is going to force retention of most client communications anyway, why not actually use the data you’re gathering? Most of this compliance archive has been historically tucked away in a CRM, rarely used or referenced. With AI’s ability to capture and archive structured notes with high accuracy, and its ability to analyze and surface information from those archives at the right time, there’s an opportunity for a bottom-line cost to become a top-line boost.
Here are a few ways we’re enabling financial advisors to use their archived communications beyond checking the compliance box.
1. Enhance the client experience
When interacting with clients, remembering their subtle preferences, concerns, and behaviors, alongside key financial details enhances your ability to give them the outcomes they don’t even know to ask for. Aside from compliance purposes, that’s one reason you keep note of these details. This valuable information that you’re already collecting can enable you to personalize your engagement strategies. But, only if you’re able to recall it without significant time investment.
Instead of trying to review the discussions from the last year during a 5-minute break they have between back-to-back meetings, the financial advisors we work with use our AI to quickly analyze their notes and equip them with actionable insights. In doing so, for example, a financial advisor may find that 6 months ago, their client mentioned a potential beefy inheritance. Also seeing that the client isn’t on target with their 529 plan, the advisor can make a sound recommendation in a matter of minutes. (The AI can also produce a detailed summary of everything the advisor has done for the client and an agenda for what they agreed to discuss during their upcoming meeting.)
Trust comes from the details. When a financial advisor can demonstrate that attention by proactively addressing emerging opportunities, you reinforce that trust.
2. Improve productivity and performance
You likely have some preferences on how to run meetings and manage clients. You may even have tried to standardize them at your firm. But do you know if the practices you have in place are really the best ones, if/how often they’re being followed consistently, and what your clients think about them?
One of our customers uses workflows in their CRM (along with surge meetings) to ensure that their advisors are working on one thing at a time, instead of everything all the time, nailing the experience for the client. To power these efficient workflows, they rely on archived client service data to identify what topics and needs come up repeatedly and to determine what should be handled when. This frees them from using precious client facetime on things that can be better handled offline.
Your client communication archive and workflows hold a lot of information that, when analyzed and activated, can give you the guidance and confidence to put best practices in place. It’s a great way to create a consistent experience for all of your clients and build a strong reputation in the market.
3. Scale practice with client insights
Looking to grow your firm? Comprehensive, archived notes can help here too.
We recently spoke with a customer who saved her firm $600K by knowing something and doing nothing. Her business partner was pushing for a fee reduction because they had just lost two clients, and he was concerned it may have been a result of their rates. A look at the records showed that none of their other clients were at risk of leaving and no one had raised concern about their fees. She made the recommendation to keep fees as is, and they continued to retain their clients. Knowing how you conduct your business and what your clients think is critical to good decision making, even if the decision is to do nothing.
That’s just one example. There are many more insights that can be leveraged for your growth strategy. Perhaps within your client communication archive you notice a trending topic your clients are curious about. Or maybe you see many of your clients have the same specific goal. These are all details that can help you focus your marketing efforts, giving you clarity on the type of pitch you should be sharing and the types of events you should consider hosting.
Security, privacy, and risk: The usual roadblocks
As CTO and co-founder of Zeplyn, security is always top of mind for me. It’s likely top of mind for you, and top of mind for your clients as well. And that’s a good thing. When you ask for consent to capture and archive all communications, despite the numerous benefits available to both you and your clients, your clients may have pause. They may have one or more worries that can and should be addressed:
- Data security: Concerns about the security of archived communications and the potential for data breaches are real. They are just as real whether or not you used the data to improve your clients’ experience. No system is 100% secure. Acknowledge this with your clients, and be sure to team up with partners who have experience building secure, standards-compliant software, and have appropriate insurance in place. Together, this is the key to mitigating this risk for you and your clients.
- Privacy: Clients may worry about yet another copy of their personal information, including recordings of their meetings, being stored in another location with limited control over how it is used. So, give them control over how these systems are using their data and disclose how they work. This goes a long way in putting them at ease. Showing them the value up front is the best way to get affirmative consent.
- Too formal of interactions: Clients may prefer a more casual communication style, fearing that archiving will create a more rigid dynamic where they aren’t as honest or open about their needs. In a situation like this, ask your client to give it a test run. Give them the opportunity to see how it all works and the results that come from it.
These are all very real concerns. Your clients need to know you have their best interest in more than just your heart. Take the time to explain to your clients where their information is stored, how long it’s stored, and exactly how it will be used to benefit them.
How to select secure and compliant AI technologies for your financial advisory
When looking at new tools for your practice, answer the following questions about the vendor:
SOC 2 (Service Organization Control 2) is a framework developed by the American Institute of CPAs (AICPA). Its purpose is to ensure that service providers securely manage data to protect the privacy of their clients. It focuses on five trust service criteria: security, confidentiality, processing integrity, availability, and privacy. Choosing a vendor that is SOC 2 compliance is crucial for financial advisors in protecting client information, complying with regulations, and building a trustworthy reputation in the industry.
2. What customer data is retained?
Your clients will want to know what data you’re capturing with your new AI technology, so find out. For example, some providers may store audio from conversations while another may only retain structured notes. Choose a vendor that retains data that aligns with how you work.
3. Where/how is customer personal data stored?
The client data your new AI technology retains is just as important as where and how it’s stored. Make sure secure measures, like end-to-end encryption, are in place.
4. What is their data retention policy?
Understanding your technology provider's data retention policy is essential for effective data governance. It will also help you manage your data responsibly and legally. Be sure to ask what data is kept and for how long; what the procedures are for storing, archiving, and deleting that data; and if there is any flexibility within the policy.
5. Who has access to this data?
You should always know who has access to your data, especially when it comes to information about your clients. Ask who may have access to your data, why they need access to your data, and what they may use your data for.
6. Is this data shared with third parties?
Some vendors grant data access to third parties, and there are often benefits to doing so: enhanced offerings, analytics and insights, etc. It's important for you to understand what data is shared, what security measures are in place to protect sensitive and protected information, and if the benefit-risk exchange is net positive for you and your clients.
5. If/how is your data used in training AI?
For AI technologies to produce meaningful outcomes, the AI needs to be continuously trained. Find out how the AI technology you’re evaluating is trained. Do they aggregate the collected data? Is it anonymized?
The obligation may be in the future, but the opportunity is now
If you want to get a higher ROI from every client engagement (and first-mover advantage), it’s going to be by intelligently leveraging your client data now. It’s a low-touch, high-impact opportunity that quickly allows you to better understand and serve your clients.The advantages of thorough archiving are not just about staying compliant; they’re about thriving in a competitive market.
Ready to build and maximize your client communication archive? Get started with your free trial of Zeplyn.
