Why Financial Advisor Reviews Matter
The SEC Investment Adviser Marketing rule offers opportunities for financial advisors to succeed as the next generation of investors becomes the now opportunity for growth.
Learn how advisors can make the most of online reviews:
The Problem(s) with Google Reviews
Yes, financial advisors can have reviews on Google today as long as they have not been solicited by the advisor. And once the new SEC Investment Adviser Marketing rule becomes effective on May 4, 2021, financial advisors can ask clients to leave a review on Google.
But advisors should think twice before using Google to collect reviews after May 4th. Here are a few reasons why:
- Google displays competitors on advisor profile pages.
- It is unlikely Google will modify their platform to make Google Reviews compliant if the SEC deems a review to be an advertisement.
- When advisors ask clients to leave a review on Google, it may be deemed an advertisement by the SEC, according to securities industry attorney Max Schatzow. If this occurs, advisors will be in violation of the SEC rule as Google is not designed to comply with SEC disclosure requirements.
- While the SEC will let advisors compensate clients for a review, Google prohibits the practice.
- Requesting the removal of Bad Actors as defined by the SEC will require filing a legal violation which can take time and effort.
How Consumers Use Online Reviews
As a financial advisor, it’s important to understand how the new SEC Marketing rule could affect you and your advisory business. Even if you don’t plan to ask for reviews or include reviews in your own marketing activities, you’ll need to be prepared to respond to questions from prospects and existing clients when they begin to see reviews appear online for other financial advisors.
While online reviews may be new to financial advisors, an evaluation of their impact on local businesses and professionals in other industries demonstrates why it’s imperative to begin preparing for a future where consumers are empowered to voice their opinions about you and your services.
The importance of online reviews on local businesses can be seen in numerous research reports conducted each year.
In an annual report prepared by BrightLocal based on a survey conducted in November 2020, 87% of consumers said they read online reviews for local businesses in 2020, up from 67% in 2010. The report indicated after reading a positive review for a local business, the next most likely actions are visiting the website of the business, searching for additional reviews to validate their choice and visiting the business in person.
And according to a research survey conducted in October 2020 by SurveyMonkey Audiences commissioned by Podium, among the 1,543 consumers surveyed, 88% said online reviews played a role in discovering a local business, 65% have read an online review in the last week and 41% said online reviews are 1 of the 3 most important factors they consider when choosing a local business.
Financial advisors interested in growing their practice should take note of these additional findings:
- 85% said employee attitude is the leading motivation to leave a positive review
- 58% of consumers said they would be willing to travel farther to a business with better reviews
- 47% are willing to pay more at a business with higher reviews
- Over 60% of consumers said they are likely to leave a review after a good experience with a local business when the business follows up with a link in an email asking for a review
As Emmy-winning writer David Pogue wrote about online review sites in Scientific American nearly 10 years ago, “No longer are you on top of the mountain, blasting your marketing message down to the masses through your megaphone. All of a sudden, the masses are conversing with one another. If your service or product isn’t any good, they’ll out you.”
How Wealthtender Compares
When the new SEC Investment Adviser Marketing rule becomes effective on May 4, 2021, Wealthtender is positioned to become the first independent financial advisor review platform fully-compliant with SEC regulations.
The SEC marketing rule served as the blueprint for building the Wealthtender review platform. Financial advisors can confidently collect and display reviews on their Wealthtender profile page with the required disclosures clearly and prominently displayed as prescribed by the SEC.
Unlike other review platforms, Wealthtender incorporates workflows for financial advisors to provide required disclosures which may be unique for each individual review. This ensures advisors can rest easy during SEC exams and sweeps when asked how reviews are used in their marketing activities.
To learn more about how Wealthtender compares to Google Reviews and other potential financial advisor review platforms, scroll down to view a comparison table.
Online Reviews & Advisor Search Results
Will online reviews of financial advisors impact how prominently a financial advisor and their website appears in Google search results?
Very likely, the answer is yes, thanks to E-A-T and YMYL.
E-A-T And YMYL
E-A-T is a term used by Google that stands for Expertise, Authoritativeness and Trustworthiness as it pertains to the creator of website content. The term originates from a 175-page document used by human ‘Quality Raters’ to assess the quality of Google’s search results.
YMYL is another term defined by Google in the document as topics that could impact ‘Your Money or Your Life’. Specifically, Google states that “Some types of [web] pages or topics could potentially impact a person’s future happiness, health, financial stability, or safety. We call such pages “Your Money or Your Life” pages, or YMYL.”
Financial advisor websites are already subject to higher E-A-T and YMYL standards by Google than websites on topics of less importance to people’s lives.
When online reviews of financial advisors proliferate, Google’s guidelines for Quality Raters hint at the importance they’ll place on third party reviews over client reviews found directly on a financial advisor’s website. Specifically, Google states “you must also look for outside, independent reputation information about the website. When the website says one thing about itself, but reputable external sources disagree with what the website says, trust the external sources.”
By joining Wealthtender, financial advisors increase their E-A-T scores in the eyes of Google, strengthening their online reputation and improving their ranking in online search results.
Lessons for Advisors from Lawyers & Docs
For doctors and lawyers, online reviews have simply become a fact of life and requirement for conducting business. For financial advisors preparing for the new Investment Adviser Marketing rule, it’s worth considering insights gained about the role of online reviews across both professions.
What Financial Advisors Can Learn About Online Reviews From Doctors And Lawyers
With millions of reviews of doctors and lawyers, these sites often rank on the first page of Google results when consumers search for these professionals. In the BrightLocal consumer review survey, 89% of consumers said they look at reviews of medical professionals and 81% look at lawyer reviews. Over 80% of consumers said they believe reviews are important across both categories of professionals.
In 2018, an NRC Health Market Insights Study of over 3,000 patients showed that 37% used online reviews as their very first step in searching for a new doctor. And even when getting a recommendation from someone they trust, 21% then turned to online reviews to verify what they were told.
Additional findings included:
- 83% said they trust online ratings and reviews more than personal recommendations
- 48% trust online ratings and reviews as much as a recommendation from their doctor
- 75% want to see at least 7 ratings before they trust a doctor
- 66% consider reviews older than 18 months to be out of date
- 59% said positive and negative reviews are equally valuable to them
- 60% said they’re suspicious if they only see positive reviews for a doctor
In 2018, a Martindale-Avvo survey of 6,300 consumers asked the criteria that mattered most to them when choosing an attorney. When asked what information they desired before their first contact with an attorney, online reviews or client testimonials ranked 5th among 20 factors. The survey also noted consumers aged 25-35 gave greater weight to reviews and testimonials than consumers over age 54.
Additional consumer findings included:
- 47% used online review sites and directories to find an attorney (more than any other resource)
- 46% read online reviews of an attorney to conduct additional research after a personal referral
As Meranda Vieyra eloquently stated in The National Law Review, “The great thing about online reviews is that you have power to present your law firm and yourself with dignity and class, regardless of how good or bad your online reviews are.” For financial advisors preparing for the Investment Adviser Marketing rule, these words may prove prescient.
SEC Marketing Rule FAQs
The SEC Investment Adviser Marketing rule becomes effective on May 4, 2021, 60 days after it was published in the Federal Register.
The compliance deadline for the SEC Investment Adviser Marketing rule is November 4, 2022, eighteen months after the May 4, 2021 effective date. (Source: Federal Register)
Financial advisors who choose to include client reviews in their advertising under the new rule will need to work closely with their compliance officers to ensure they satisfy the SEC’s new disclosure and oversight requirements.
Key SEC expectations for advertisements featuring financial advisor reviews include:
– Clear and prominent disclosure indicating: If a review is from a client or non-client
– Whether or not the reviewer was compensated
– How the reviewer was compensated (in cash or otherwise)
– Any conflicts of interest (including a description of conflicts)
– A written agreement must be in place between a financial advisor and reviewer (unless the reviewer receives less than $1,000 for their review in cash or otherwise within a 12 month period)
The SEC also made it clear these requirements apply even if the review is a social media post like a tweet with a limited number of characters.
Yes, the SEC has established this webpage where they will periodically update a list of FAQs with answers related to Marketing Compliance for the new rule.
Since it’s a violation of Yelp’s terms of service for businesses to ‘solicit or ask for reviews’ from their customers, financial advisors are unable to encourage their clients to write a review on Yelp, even after the new SEC Investment Adviser Marketing rule becomes effective on May 4, 2021.
Yes, financial advisors can have reviews on Google today as long as they have not been solicited by the advisor. Once the new SEC Investment Adviser Marketing rule becomes effective on May 4, 2021, financial advisors can ask clients to leave a review on Google, but cannot compensate clients for their review, a practice prohibited by Google.
However, it should be noted that Google is not designed to comply with the SEC Marketing Rule if a review is deemed an advertisement, which, according to securities industry attorney Max Schatzow, is possible if a financial advisor asks for the review.
When the new SEC Investment Adviser Marketing rule becomes effective on May 4, 2021, Wealthtender is positioned to become the first independent financial advisor review platform fully-compliant with SEC regulations.
How Wealthtender Compares: Financial Advisor Reviews
Wealthtender is the first independent advisor review platform designed to be fully compliant with the SEC Investment Adviser Marketing Rule.
See how Wealthtender compares with other platforms in the comparison table below.
|wdt_ID||Features||Wealthtender||Advisor Website||Google Reviews||Yelp|
|1||Is the platform designed for compliance with the SEC Marketing rule?||Yes||Maybe||No||No||No|
|3||Are profile pages exclusive to each advisor?||Yes||N/A||No. Competing advisors displayed on page.||No. Competing advisors displayed on page.||Yes|
|6||Can I turn reviews off and still enjoy all other platform benefits?||Yes||N/A||No||No||Yes|
|7||Can I compensate clients for reviews as permitted by the SEC?||Yes||Yes||No. Prohibited by Google.||No. Prohibited by Yelp.||Yes|
|8||Can I solicit reviews?||Yes||Yes||Yes||No. Prohibited by Yelp.||Yes|
|9||Are there potential SEO benefits?||Yes||Yes||Yes||Yes||Yes|
|10||Can I add "clear and prominent" disclosures required by the SEC?||Yes||Yes||No||No||No|
|11||Can reviews be displayed anonymously?||Yes||Yes||No||No||No|
|12||Can I easily request removal of 'bad actors' as defined by the SEC?||Yes||Yes||No||No||No|
|13||Has the platform been reviewed by an experienced securities attorney?||Yes||Maybe||No||No||No|
🎙 Model FA Podcast Episode 38
Additional Resources & FAQs
Can You Provide A Brief History of Financial Advisor Reviews?
In 1961, the year when John F. Kennedy became president of the United States, the SEC issued a rule prohibiting financial advisors from including client reviews when advertising their services. In fact, the rule concluded that an advertisement featuring a client review (referred to by the SEC as a ‘testimonial’) would “constitute a fraudulent, deceptive, or manipulative act, practice or course of business”.
Of course, the SEC deserves credit for the important role it plays protecting consumers from harm through its oversight of the financial services industry. And the prohibition of testimonials has certainly alleviated SEC concerns of financial advisors cherry picking 5-star reviews to promote their investment advisory services while burying 1-star reviews.
But this prohibition effectively silenced the voices of millions to a whisper over the past six decades whose opinions of their financial advisors were limited to cocktail parties while online reviews of professionals in other industries proliferated.
In 2019, the SEC acknowledged their 60-year old rule was doing consumers a disservice by not providing an opportunity for people to evaluate a financial advisor based on reviews as one factor in their hiring decision, in the same manner people research other professionals like doctors and lawyers online (not to mention mechanics, plumbers and babysitters).
What is the Investment Adviser Marketing Rule?
The Investment Adviser Marketing rule allows financial advisors to provide investors with useful information to help them evaluate and choose investment advisers and advisory services, subject to conditions stipulated by the Securities and Exchange Commission (SEC) designed to prevent fraud.
In a press release issued on December 22, 2020 announcing its modernized marketing rule for financial advisors, the SEC acknowledged that technology and consumer expectations have changed dramatically since its decades-old advertising rule took effect.
According to SEC Chairman Jay Clayton, “The marketing rule reflects important updates to the traditional advertising and solicitation regimes, which have not been amended for decades, despite our evolving financial markets and technology.” He goes on to say the new rule “recognizes the increasing use of electronic media and mobile communications and will serve to improve the quality of information available to investors.”
While the Investment Adviser Marketing rule removes the severe limitations on financial advisor reviews, the SEC maintains its important role protecting consumers by requiring disclosures and conditions that must be met to ensure reviews are presented in a fair and balanced manner.
What Advice About Online Reviews Do Doctors and Lawyers Have for Financial Advisors?
We asked several doctors, lawyers and online review experts with experience in the medical and legal professions to offer their perspective for financial advisors preparing for the new SEC marketing rule. Here are a few of the highlights:
Max Meinerz, DDS
“Online reviews offer a way for you to invest some energy in generating a positive marketing message today that will be on the internet for minimally the length of your career.
Most patients and clients are happy to write you reviews and love the idea of sharing their chosen professional with others. You simply have to make a practice to ask and build a culture of referral inside of your organization.
Every compliment offered to you or any person on your team can be an invitation to ask for a review or referral. Responding in the moment is extremely important and making it very easy for clients to write that review by emailing/texting a link to your review page can assist in boosting reviews.
Make sure to spread your reviews across multiple platforms that are relevant to your industry. Only focusing on Google reviews can hurt you if Google chooses to change their search algorithm in a way that doesn’t jive with your SEO strategy.”
“Online reviews are critical to any business in this digital age. As clients skew younger, they obtain nearly all of their information online. Online reviews provide multiple benefits, including marketing support, differentiation in a crowded market, business protection/insurance (positive reviews drowning out a negative review), pre-client meeting screening and validation.
Online review sites have helped me but they can also hurt your business if you don’t have an online review strategy as part of your marketing efforts.
Many of my clients have mentioned my reviews on Avvo [an attorney online review site] when hiring me so that is a positive.
Sites like Yelp are more mixed, especially since Yelp solicits advertising and punishes non-advertisers. As an example, I used to ask clients to write Yelp reviews and accumulated 10 to 15 five-star reviews.
At some point, Yelp asked me to advertise and when I declined, they buried ALL of my reviews under ‘Reviews NOT Recommended’ and they do not appear unless you scroll down and click on that link. It’s a common Yelp complaint from business owners and HARO founder Peter Shankman has commented and blogged about it in depth.”
Mrinalini “Melanie” Jayashankar
Attorney/Owner of the MJ Law Firm
“We are in the age of the internet. People make most decisions based on online reviews and recommendations. Therefore, having an exemplary online footprint with great online reviews is one of the best ways to grow your business.
Be proactive about online reviews and actively seek them out. The best way to get started is to start finding out about free directories and review websites for your profession. Claim your profile if applicable, and allow for online reviews. Start requesting reviews for multiple sites so that when people Google you, they will encounter multiple favorable reviews.
I always ask prospective clients to Google me and form their own opinions. My reviews speak for themselves, and most prospective clients feel more comfortable hiring me after seeing the multiple favorable reviews online. Have your online reviews work for you! Your former clients can sell you better than you can sell yourself!
I utilize both Avvo [an attorney online review site] and Google for reviews. I feel that both have positively impacted my practice. Most prospective clients comment that they looked me up online and were happy to see positive reviews. Online reviews also provide other benefits. You can share links to review sites on your website which can improve website traffic. Having multiple favorable Google rankings can potentially also improve your Google ranking in searches and general SEO performance.”
“Online reputation management is a burgeoning area in the new digital world where Google is now your new digital front door. What you say and what you post matters. And not posting and staying silent can also impact your reputation and damage trust. People expect instantaneous responses in a 24/7 connected digital world.
One thing I always tell doctors is to make sure they get online reviews the right way. This means don’t write fake reviews or have people try to write reviews who have never used your services. Navigating online reviews is challenging- it is why people hiring my agency, Ruby Media Group, to help them with this and have a consultant on retainer to craft these responses in real time in a way that mitigates risk and causes the least amount of harm. In addition to not causing harm, you also want to see if you can ’turn the tide’ to turn someone who is disgruntled into someone who can become an advocate. If people take the time to write a terrible review about your practice, they ultimately want to feel heard.
Step 1: Make them feel heard. Use their name when replying. “Hi X”
Step 2: Validate their feelings with true empathy. Strip the emotion out of what they are saying and objectively try to hear what the complaint is. Address it. Do not ignore it.
Step 3: Know when to stop. If you have tried every possible avenue to be accommodating to someone and they still continue to trash your business in every reply, a public thread of a business owner arguing is never a good look.
Online reviews have tremendous potential to impact your reputation, but ultimately, how you respond to the reviews has a greater impact. Respond with elegance in a way that is on brand for your company. People do not only measure a business by the negative reviews. Ultimately, they measure the business by the way the owner replies. Fundamentally, that is 50 % of the equation here, and the part that is unfortunately overlooked.
You as the practice owner have the power to help or hurt your online reputation. You have more power than you think and that starts with you and how you choose to handle difficult online situations.”
David Reischer, Esq.
Attorney & CEO of LegalAdvice.com
“My most important piece of advice to financial advisors fearful of online reviews is to work extremely hard to make sure they weed out potential bad reviews before they happen. I have been told by consumers at company trade shows that we attend that typically they just scan the attorney reviews looking for consistency among the reviews. If a pattern emerges for an attorney that is mostly negative then it is usually a good indicator of a problem.
Good reviews aren’t as important and valuable an indicator as bad reviews. Try to be proactive and preemptive to make sure a customer is satisfied before they post a negative review by asking a customer what can be done to make them happy and satisfied.”
What Does the SEC Say About Financial Advisor Ratings by Third Parties?
Under the new rule, financial advisors will be allowed to advertise ratings they receive from third party firms, subject to additional disclosures and conditions stipulated in the Investment Adviser Marketing rule.
In fact, the SEC states they anticipate approximately 50 percent of financial advisors will use third-party ratings in advertisements, so a proliferation of third party ratings of financial advisors may be on the horizon.
Key SEC expectations for advertisements featuring financial advisor ratings include:
- Clear and prominent disclosure indicating:
- The date on which the rating was given
- The period of time upon which the rating was based
- The identity of the third-party that created and tabulated the rating
- (If applicable) That compensation has been provided directly or indirectly by the financial advisor in connection with obtaining or using the third-party rating
- Financial advisors must have a reasonable basis for believing the questionnaire or survey used to prepare the rating meets certain criteria, including making it “equally easy for a participant to provide favorable and unfavorable responses”
- The firm publishing the rating can not be affiliated with the financial advisor and must be in the business of preparing ratings in their ordinary course of business
(These SEC expectations are summarized and don’t reflect all disclosure, oversight and disqualification provisions discussed in detail in the rule.)
I’m a financial advisor interested in joining Wealthtender. Where can I learn more?
Thanks for your interest in joining our community of financial advisors who know the power of digital marketing to attract their ideal client and grow their business. Learn more about Wealthtender and how you can get started today.
About the Author
About the Author
Brian is CEO and founder of Wealthtender. He and his wife live in Texas, enjoying the diversity of Houston and the vibrancy of Austin.
With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.