Hearsay Aims to Help Advisers Ensure Compliance With Marketing Rule

Hearsay Systems, a digital client engagement firm for the financial services industry, has announced that it is expanding its compliance capabilities to help financial professionals make the most of testimonials and endorsements.

The new functionality, which will be available in early October, is designed to assist advisers and firms in adhering to the SEC’s modernized marketing rule, which goes into effect on November 4.

The new regulations are aimed at simplifying guidelines and bringing them into alignment with more modern, digital practices. Under the marketing rule, endorsements and other testimonials written about advisers and shared publicly by the adviser via social media are treated as advertisements.

This is significant because financial professionals are increasingly operating in a social world driven by likes, comments and shares, a release from the firm says, noting that testimonials and endorsements are critical to an adviser’s marketing toolkit.

Hearsay has upgraded four components of its programs to support the use of testimonials and endorsements within the new marketing rule’s framework. With deployed supervision coverage for LinkedIn recommendations and skills and Facebook reviews and ratings fields, teams can use testimonials and endorsements to enhance authenticity and personal branding, while inspiring client trust and confidence.

For example, Hearsay Social’s new capabilities allow supervision and capture of the text of LinkedIn “inbound” recommendations, i.e., recommendations written about Hearsay users, when they are published by the Hearsay user. The same is true regarding the text of outbound LinkedIn recommendation requests made by Hearsay users when the request is made.

Because different scenarios require different disclosures, Hearsay will automatically update comments and bios to satisfy SEC rules. Custom disclosures set by the compliance administrator will indicate whether the testimonial was solicited, paid for or constitutes a conflict of interest.