Marketing compliance in the financial services industry has gotten a whole lot more complicated. Evolving regulations, the expansion of artificial intelligence, more complex and varied marketing and sales journeys, and greater diversity (in investor knowledge, sophistication, and language skills) have made staying legal and compliant more challenging than ever.

This article reveals the most common compliance errors asset and wealth managers make today and how you can avoid them so you won’t get into trouble with regulators.

Common Causes of Financial Marketing Compliance Errors

Before we get to the actual error types, let’s look at some common causes of them.

The gap between digital and traditional marketing

Inconsistent compliance between digital (fast, sometimes automated) and traditional (slower, more deliberate) marketing methods often contributes to compliance errors. The rules governing more traditional marketing methods, such as signage and brochures, are often not adequate for digital marketing.

Errors generated by artificial intelligence

As we all have experienced, often many times every day, artificial intelligence (AI) is definitely not infallible. The mistakes it makes can be quite convincing, and they can be easy to get through a compliance review.

Complex digital journeys

Did a prospective client actually see required information and disclosures during the marketing and sales journey? Did they get all the information they need to make an informed choice about their finances? That can be tough to determine as the online marketing and sales process becomes more complex and varied.

Content getting passed on to the wrong people

In the traditional marketing era, content for reps versus that for investors was easier to keep separate. With email, social media, and website links, it is much easier for material to get passed on to the wrong people.

High content volume

Content volume is exploding because of heightened demand through digital delivery, along with artificial intelligence generation capabilities. Many compliance professionals feel overworked and stressed out. This is a perfect recipe for compliance mistakes.

Not working with financial marketing experts

Marketing for wealth and asset managers differs from that in other industries. Generalist marketers don’t understand the nuances and often get things wrong.

Now that we’ve explored some of the common reasons compliance issues happen, let’s review the ones that occur most often and how to avoid them.

Top Compliance Marketing Mistakes

Here are the most frequent compliance errors that could cost your company, both in penalties and reputation.

• Inadequate disclosures, including risk warnings, fee details, or performance context. Even the most diligent firms leave off critical factors that people need to make informed decisions about their finances, and regulators don’t take this issue lightly. Most marketing requires significantly more than the standard “Past performance does not guarantee future results” warning.
• Misleading claims like exaggerated benefits, minimized risks, or using subjective terms like guaranteed, low fees, or high returns. Always be realistic and factual when discussing your solutions and services to avoid raising regulators’ hackles.
• Improper testimonials and endorsements. Issues in this area include misquoting people, improperly editing footage or recordings to make them misleading, and inaccurately identifying participants and their relationships with your firm. Disclosing a paid versus non-paid relationship is significant to regulators. Adequately explaining the nature and extent of a client relationship is also critical. And you can’t forget to add standard marketing disclosures, as needed, to content generated by and with outside sources. This is a complicated area and it is important to know and comply with the appropriate regulations and rules.
• Performance messaging issues, including misleading return data, inappropriate benchmark selection, or incomplete timeframes. This is an easy compliance mistake to avoid. Always check your data, ensure it is accurate, and that you present it correctly and completely. Work with your compliance team to ensure you pair required disclosure with your data. If data feels off or fishy to you, it will likely look that way to regulators. In short, keep it clean.
• Social media fails, such as failing to monitor employee communications on social platforms, lack of compliant recordkeeping, and improper interactions in online forums. Social media is an emerging frontier in the financial marketing compliance game, and it is absolutely critical to partner with compliance people who understand the space.
• Inaccurate FDIC representation, which involves misleading people by implying non-deposit products are FDIC-insured or otherwise protected and guaranteed. Always scrub your materials to ensure they don’t imply guarantees or protections that don’t exist.
• Failure to update marketing materials. This involves collateral with outdated interest rates, product terms, assets under management, or regulatory information. Avoid this issue by implementing a regular update calendar and sticking with it.
• Non-compliant data usage including using consumer data for targeting without proper consent, failing to honor opt-out signals, or not tracking consent across all marketing platforms are common examples. Partner with a compliance expert or attorney experienced in this emerging area of compliance to ensure your data policies and procedures are set up correctly.
• Terminology inappropriate for certain investors. You can use more sophisticated language and terminology with wealthy accredited investors and financial professionals. However, regulators don’t look kindly on this if you are communicating with average people like those saving for college or retirement.
• Inadequate management of third parties, including failing to ensure content created by partners or fintechs meets regulatory standards. Leveraging content developed by third parties is becoming increasingly common in the financial services space. If developed by respected parties, it should help build authority for your website and improve SEO and visibility in artificial-intelligence-generated summaries. What’s important is to treat it like in-house-created material. Just because you didn’t create it doesn’t mean you won’t face the consequences if the material isn’t compliant.

These common mistakes often lead to heavy fines, cease-and-desist orders, and reputational damage. Don’t let them happen to you.

Strategies for Improving Your Financial Marketing Compliance

Beyond the suggestions in the previous section, here are some additional ways to improve your marketing compliance protocols.

Automate reviews

Leverage compliance software to centralize workflows and automate reviews and audits. It is a great way to bring order, discipline, and efficiency to what otherwise can be a cumbersome and chaotic process. A small investment in software can pay off in a big way.

Some great examples include:

• Blee: Good for companies of all sizes, including growing firms and Fortune 500 companies. It integrates seamlessly into existing workflows.
• Warrant: Ideal for highly regulated firms (SEC, FTC, ADA). It comes with pre-built financial rules that can speed implementation.
• Sedric: Best for multinational firms as it can handle 40 languages.
• Saifr: Streamlines pre-publishing review across multiple teams.
• PerformLine: Best for multi-channel, post-publish monitoring including calls, chat, email, and social media.
• Red Oak: A popular industry favorite that streamlines the marketing compliance process and reduces regulatory risk for RIAs and Broker-Dealers.

Maintain centralized records

Create a single, authoritative source for company and product information to ensure what is included in marketing content is current and accurate. Store regularly used disclosures, as well.

Train marketers

Educate everyone who handles your marketing, including agencies and freelancers, on regulatory and compliance requirements. Provide regular updates to keep everyone current as well.

Use templates

Of course, every marketing piece is unique. However, it is smart to leverage templated information, such as pre-approved copy blocks and performance tables, whenever possible, to prevent errors.

Taking these steps will not eliminate every compliance problem, but it will certainly reduce them.

Common Compliance Errors: The Final Word

It’s easier to reduce common financial marketing compliance problems when you know what they are, so you can prevent them before they arise. Also, taking steps to educate marketers on regulatory requirements, leveraging technology to organize processes, using templates, and centralizing records will help as well.

Take the next step and discuss working with Sondhelm Partners, an agency centered on serving wealth and asset managers. We understand the space and the nuances of all aspects of compliance. Schedule a call to get started.