The Good, the Bad and the Ugly: All Reviews Can Help Your Practice
Investment advisors can finally join the world of restaurants, hotels and other business entities by sharing endorsements from sites like Yelp and Angie’s List, per a recent guideline update
from the SEC’s Division of Investment Management.
The growing importance of social media commentary and web-based review sites is now recognized by the SEC in its new guideline under rule 206(4)-(a)(1) of the Investment Advisers Act of 1940, which was created to forbid the use of a testimonial by an investment advisor in advertisements. In the guideline update, the SEC states that advisors can now publish public comments about their services, posted on third-party sites, as long as advisors include both positive and negative reviews as-is.
So how can advisors make the most of this opportunity? First, it’s crucial to be aware of various online rating systems to understand them and maximize business exposure. Common review sites include Yelp, Angie’s List, Google Reviews and Yahoo Local Listing. Additionally, last year Evolution Finance launched Wallethub.com, a social networking site where clients can review financial professionals and companies.
The key to the new guideline is the inclusion of all third-party commentary, not just the positive testimonials. Acknowledging third-party reviews may be intimidating for advisors because of the potential for negative comments, but these comments still hold value by validating the truth of glowing remarks and by shedding light on needed improvements. Of course, as with any web endeavor, advisors should check with their compliance departments to understand requirements, as well as ensure they’re playing by the rules.
For a deeper dive on the new guideline, see my recent blog post
on the topic.