Nearly 2/3rds of RIAs have yet to reach compliance having left section 5L on their Form ADV blank – Missing out on potential growth opportunities from modern marketing methods
DALLAS, May 17, 2022 /PRNewswire-PRWeb/ -- Indyfin, an innovative fintech company, announced today the results of their commissioned research study that examines SEC-registered firms' adoption of the SEC's new Marketing Rule. The study, "2022 Form ADV Research: Behind the Numbers of the New Marketing Rule," showed dramatically how unprepared firms are, with 64.3% of firms not completing a key section of their Form ADV that enables them to leverage marketing opportunities that were previously not allowed.
More than 14,000 SEC Registered Investment Advisors (RIAs) filed an ADV amendment as of March 2022. However, 64.3% of these firms did not complete the ADV Section 5L, demonstrating that the industry is woefully unprepared for the coming deadline for compliance in November later this year.
"What our research has shown is that there is still uncertainty and confusion within firms on how to best utilize the provisions of the rule to best position their firms for growth," said Akshay Singh, Founder of Indyfin. "The new SEC marketing rule is a once in a generation chance to differentiate themselves and to modernize how advisors can market their firms, particularly when it comes to digital channels, one of the fastest-growing channels available."
Additional findings of the research found that only 2.3% of firms that completed the ADV section 5L use testimonials, despite the fact that testimonials are now available for use. For many other service industries, client testimonials provide the social proof needed to make purchase and partnership decisions. Testimonials provide the ability for an advisor's current clients to share how their unique needs are being met and why they love working with a firm.
Another provision of the SEC New Marketing Rule is endorsements, which are reviews of an advisor by parties other than clients. This classification includes former clients and other professional associations like accountants, attorneys, and relevant promoters of an advisor's business. Currently, only 2.1% of firms that have completed section 5L report using endorsements in marketing their business, again showing the massive opportunity for advisors to differentiate their firms.
The most exciting aspect of the research is the discovery that Advisory firms have already begun using 3rd-party reviews on platforms that offer unbiased perspectives. Within the provisions of the new regulations, rating organizations must structure surveys to elicit clients' positive and negative responses. Upon examining the data, the study found that only 9.2% of the firms that have completed ADV section 5L are using third-party ratings and reviews. Of the new provisions not previously available, this aspect of the new marketing rule has gained the most traction and presents a clear opportunity that should be executed on in advance of the November deadline.
A key takeaway from this finding is that the adoption of third-party ratings and reviews will spur the emergence of wealth tech platforms dedicated to serving the needs of investors and advisors alike, similar to how other platforms for ride-sharing (Uber), lodging (AirBnB) and local businesses (Yelp) have built trust online and provided consumers the confidence to digitally find and select the services they are looking for.
As a result of the massive consumer shift to researching their every need on digital channels, Indyfin's built a platform designed to provide intuitive search, matchmaking, and easy-to-read advisor profiles that clearly differentiate each advisor by highlighting their unique credentials and experience along with ratings and reviews from existing clients. Financial advisors looking to grow their business partner with Indyfin to build credibility and trust with clients and prospects online.
Indyfin's investor experience platform brings easy-to-use dashboards and automated workflows that make gathering feedback easy. In just minutes advisors can request, respond to, maintain, and share reviews from existing clients, all in a compliant manner. Once an advisor has feedback, they are able to quickly build a robust Advisor Profile that shows their unique value as a fiduciary. Indyfin has been vetted by experienced investment advisory attorneys and designed with relevant provisions in place to make it easy for advisors and their compliance teams to leverage the platform with confidence.
"The future of wealth management marketing is here and while many have held the wait and see mentality, they will likely find themselves scrambling in the third quarter," noted Mr. Singh. "There is urgency here, the clock is ticking and firms as well as their compliance teams should act now, where there is a clear opportunity to earn a first movers advantage in using the new rule to grow their firms."
To learn more about the Indyfin platform, log onto http://www.indyfin.com; and to download our recent industry research, "2022 Form ADV Research: Behind the Numbers of the New Marketing Rule," download it here. https://hub.indyfin.com/research/2022-form-adv-research-behind-the-numbers
Media Contact
Timothy Welsh, Nexus Strategy, LLC, 415-847-4874, [email protected]
SOURCE Indyfin
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