July 25, 2017

Wealth Management PR in an Uncertain Regulatory Environment

Financial-AdvisorWith the Department of Labor’s fiduciary rule in transition, the wealth management industry is abuzz with questions about what its future will hold.

In a May Wall Street Journal op-ed, Labor Department Secretary Alexander Acosta announced that the rule would take effect on June 9th, but that it “may not align with President Trump’s deregulatory goals.”

Wealth management firms have spent tens of millions of dollars preparing to comply with the rule, only to find that its future is uncertain. Investors are also unsure of how they will be impacted, but expect their advisors to act as fiduciaries.

While I don’t have a particular stance on how the industry should be regulated, there’s an opportunity for wealth management firms to use their fiduciary status to position their businesses as premium brands, even if regulators do away with the rule entirely.

“We’re still a fiduciary.”: A case study in integrated communications

When the DOL initially issued the rule in 2016, a number of large wealth management companies came forward to applaud the regulation, which intends to preserve the integrity of the investment advice given to retirement savers and other household investors.

One outspoken proponent of the rule is Sallie Krawcheck, an industry veteran and former president of Bank of America’s global wealth and investment management division. Earlier this year when the White House announced that implementation would be delayed, Ms. Krawcheck—who recently started her own firm, Ellevest—sent her clients and prospects an email with the subject line “We’re still a fiduciary. Period.” The email discussed the evolution of the regulation and explained why retail investors should want to work with a fiduciary—even without the DOL requiring it. Ms. Krawcheck also used her blog and social media channels to discuss her views.

The media responded well to Ms. Krawcheck’s stance and her insights are regularly featured in the financial media, as well as in the consumer press.

Opponents of the regulation

However, not all advisors see the fiduciary rule as helpful. Brokers generally adhere to the Financial Industry Regulatory Authority’s (FINRA) suitability standard, which requires that all recommendations should be suitable for clients. There’s some debate about which standard of care is best for the end user (fiduciary vs. suitability). Generally, critics of the fiduciary rule say that it can make it tougher and more expensive for investors with smaller account balances to receive financial advice.

While there are risks associated with criticizing a regulation that is intended to benefit consumers, many industry experts have made thoughtful and well-reasoned arguments against it. Investment Company Institute (ICI) CEO Paul Stevens warned last year that the rule  “could indeed end up costing investors billions of dollars if it deprives them of access to the advice and help that they need.”

Message development and multi-media execution

Regardless of where they stand in this debate, wealth management firms of all shapes and sizes should develop clear and concise messages describing the steps they are taking to ensure that their interests are fully aligned with those of their clients.

The messages should be communicated through multiple channels, including:

  • Print and broadcast media
  • Email communications and mailers
  • Client events and meetings
  • Social and digital media
  • Blogs and op-eds
  • Client testimonials and case studies
  • Participation in industry groups and conferences

This public relations approach borrows the best tactics from other disciplines of integrated marketing communications, including social media and direct marketing. In order for advisors to effectively reach the specific pockets of investors they are targeting (as determined by asset levels, income brackets, risk profiles, goals, etc.), a multi-media, multi-strategy approach is necessary.

Changing regulatory and competitive environment

Just as the regulatory environment for wealth managers is shifting, so is the competitive landscape. Digital investment platforms are gaining billions in assets, as many investors seem comfortable with the low-cost, passive portfolios robo-advisors use.

As the industry evolves, advisors are being challenged to incorporate new technologies, mitigate conflicts of interest and present their best investment ideas. A strong public relations program can help firms take a leadership role by articulating their efforts in these areas, while differentiating themselves from competitors.


By Nicole Hakimi