PR firms must recognize that RIAs answer to a higher authority

Although many registered investment advisors market their firms themselves and do it quite well, some RIAs turn the job over to the public relations professionals. The potential problem is that there are a few PR professionals who can’t accept the fact that since RIAs are regulated, their promotional strategy has to be much different from that of firms that don’t answer to securities regulators. See: Advisors should go all-in to make PR worthwhile — otherwise, steer clear.

A case in point: I recently recommended adding disclosures to an RIA’s newsletter. I subsequently received an e-mail from the advisor’s PR firm saying that the disclosures “seem like a bit much.” The person previously in charge of the newsletter — who had always found room for such disclosures — had left the firm. In the latest newsletter all of those previously recommended disclosures were missing in action. The new PR person decided that the look of the newsletter was more important than making full disclosure to prospective and existing clients. See: Advisor newsletters: Compliance-wise, all news may not be fit to print.

I jokingly told the PR person that if an SEC examination team shows up at the advisor’s office, she can give them her opinion that an RIA’s disclosure obligations are “a bit much.” Not surprisingly, the chief compliance officer for the RIA ordered the PR firm to find room for disclosures in the newsletter. See: Behind the PR man’s curtain: how RIAs can successfully deal with the media.

Substance before style

At a minimum, PR types should understand that disclosures are designed to protect investors. They also help advisors avoid situations where clients say they were not warned about certain risks.

A PR firm hired by an advisor should have experience working in a regulated industry. The person working on your account should understand the parameters on what content is permitted by securities regulators. You are destined to have problems if the PR firm believes that regulations need not get in the way of a great marketing campaign. See: Report of a possible delay in DOL’s fee disclosure rule sparks apprehension among advisors and industry observers.

Another county heard from

The folks handling your Internet marketing campaign may also be ambivalent about compliance. See: SEC sends sharp warning to advisors using social media. I recently reviewed website content that was filled with references to counties served by the investment advisory firm. By the time I was finished reviewing the content, I wondered if the RIA had changed its name. Every reference to the name of the RIA somehow incorporated the names of counties near the firm’s office. See: Outdated RIA websites risk compliance trouble not to mention credibility.

That’s because the RIA was attempting to enhance the firm’s search engine visibility by mentioning key words ad nauseum. The RIA’s website even had a Frequently Asked Questions section, which assured prospects that the firm is a fiduciary and always puts its clients’ best interests first. There was nothing wrong with that statement, except that it mentioned only one of the counties that the RIA was targeting. The wording of the sentence made it appear that the fiduciary duty is only owed to clients in that particular county. Obviously, this was not the point that the RIA was attempting to convey.

SEO strife

An RIA is certainly permitted to incorporate key words into website content, as long as they are not misleading and don’t confuse the prospective client. Although these key words were intended to enhance the RIA’s visibility on the Internet, they distorted the advisor’s message. The website hardly mentioned the RIA’s qualifications and strategy and how it differed from dozens of other advisors marketing their services in that area. The PR pitch seemed to presume that prospective clients only care about finding advisors in their own specific geographic areas.

Ideal content does more than just attract prospects to the firm’s website; it should also convince the prospect that this is a firm that is worth contacting. Attracting prospects to the website is just the first step in an RIA’s marketing effort. See: FINRA guidance may help RIAs avoid social media blunders.

Beware excessive synergy

PR types love the concept of synergy to reinforce an RIA’s brand. For example, suppose the PR firm is marketing an RIA and its companion accounting firm. If the marketing campaigns are linked together in any way, the PR for the accounting firm must comply with RIA advertising regulations.

A different RIA was co-branding the name of its wealth management firm and the firm’s related entities. When that occurs, the advertisements for all of the related entities must meet the strict advertising standards imposed on RIAs. See: Examiners may ask 'Says who?’ about your advertisements.

Generating good buzz for an RIA can be accomplished without violating state or SEC advertising regulations. Otherwise, you’ll have examiners buzzing around your firm and might get stung.

Les Abromovitz is a senior consultant with National Compliance Services Inc. Les, an attorney, is the author of a new book, The Investment Advisor’s Compliance Guide (National Underwriter Co., 2012). Les can be reached at 561-330-7645, Ext. 213, or at LAbromovitz@ncsonline.com.