The Biggest Mistake Financial Advisors Make with Texting (And How to Fix It)

Texting allows financial advisors to maintain critical contact with their clients in their professional practice. It’s fast, efficient, and convenient. However, many advisors run into problems by using their personal cell phones and unregulated text messaging applications when communicating with clients.

A small mistake, such as using unauthorized communication channels can result in regulatory infractions, security threats, and reputational damage.

Why This Mistake Puts Your Business at Risk?

Financial firms are required to store all client-related communications in accordance with SEC and FINRA regulations. Texting clients without proper oversight can expose you to regulatory penalties.

• Regulatory fines – Financial firms have faced millions of dollars in penalties for failing to maintain proper records of electronic communications.

• Privacy risks – Sending unencrypted messages puts client information at risk of exposure.

• Legal consequences – Non-compliance attracts regulatory scrutiny, which can lead to audits, spot checks, and even civil or criminal charges.

• Loss of trust – Clients expect financial professionals to uphold the highest standards, including safeguarding their personal and financial information.

How to Fix It: Smart Solutions for Compliance and Security?

Financial advisors don’t have to stop texting clients. They just need to do it the right way. Here’s how:

1. Use a Compliant Messaging Platform

Switch to a FINRA and SEC-compliant text messaging application like Falkon SMS, which:

• Automatically records and stores all messages to meet compliance requirements.

• Encrypts communications to protect client data.

• Prevents data loss by ensuring all messages are accessible for audits.

2. Establish Clear Texting Policies

Set internal guidelines for texting clients, including:

• What types of information can and cannot be shared via text.

• When to use text messaging versus email or phone calls.

• How messages should be documented and stored.

3. Get Client Consent?

Before texting clients, obtain written consent confirming they agree to receive messages from your firm. This prevents misunderstandings and ensures compliance.

4. Avoid Sending Sensitive Information

Never send financial statements, account numbers, or investment advice via text. Instead, direct clients to a secure portal or schedule a call for detailed discussions.

5. Train Your Team on Compliance Best Practices

Ensure all employees understand:

• The risks of using personal devices for client communication.

• How to use an approved messaging platform correctly.

• The importance of archiving all business-related texts.

Stay Compliant, Stay Secure

Text messaging can be a valuable tool for financial advisors when used correctly. By switching to Falkon SMS and implementing clear guidelines, advisors can text clients while staying fully compliant with regulations, avoiding penalties, and protecting their business.

Want to learn how Falkon SMS can help your firm stay compliant? Book a Free Consultation to discuss your needs and see Falkon SMS in action.

Protect your business. Stay compliant. Choose Falkon SMS as your secure messaging platform.

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