What You Need to Know About... E-signatures

Going paperless no longer refers simply to the electronic transmission of your plan’s communications or your firm’s commitment to being “green.” Increasingly, individuals and companies are choosing to store digital versions of their information and documents—a trend that can create complications when files and forms need a signature for approval.

The June 2000 passage of the Electronic Signature in National and Global Commerce Act—conveniently known as ESIGN—however, ensured “the validity and legal effect of contracts entered into electronically.” Today, passwords, personal identification numbers (PINs), fingerprint scans and even the “I accept” button that follows an application (app)’s or website’s “Terms and Conditions” can be as legally binding as any physical signature.

Plan advisers can use e-signatures to allow clients and participants to draw or type their names to confirm receipt or approval of a document or plan change. Several e-signature products are available for advisers to add such technology to their practices. DocuSign and RightSignature can be accessed online, and both offer free trials and pricing programs for businesses. Adobe EchoSign is a free program that does not require users to download or install any software. Users can send or e-sign files from a mobile device, such as their tablet or smartphone, and documents are automatically filed and tracked in real time. Adobe’s website even includes a “how to” instructional video.

Before requiring e-signatures, plan advisers should consider how their clients might respond to the technology. Having plan sponsors fill out forms in this way may speed up your process, and some technology-friendly plan sponsors may be thrilled to avoid the hassles of fax machines and scanners. However, others may prefer to sign a physical document for security or document storage reasons, or because they simply are uncomfortable with the technology.

If you decide to use electronic signatures, make sure to confirm the privacy and legality of your chosen solution, educate your clients about the new process, and consider making the change universal so that clients are not confused by conflicting “paperwork” procedures. Advisers may want to cover their bases by allowing a transition period for plan sponsors and plan investment committees to adopt and grow accustomed to the new tool.

Undoubtedly, however, in the near future, e-signatures will be accepted as the norm.

According to Adobe’s EchoSign Web page, users can create a free account, then complete the following steps:

1. Add recipients’ email addresses, name the document, and include a short message;
2. Upload the file from your documents;
3. Choose from the “eSignature” and “Fax Signature” options—users may include their own signatures, preview the signatures, password-protect the signed document and/or verify signer identity by use of a password, knowledge-based authentication or Web-identity authentication;
4. Click on the “Send” button; and
5. Drag and drop text boxes onto the uploaded document for signature, initials or other information.