Financial advisors gave an immediate thumbs-up to the Securities and Exchange Commission's announcement last December that it was finally giving the go-ahead for client testimonials.
The good news is part of the SEC's revamped advertising and marketing rule that went into effect this past May. The compliance date is Nov. 4, 2022.
Meantime, some eager advisors have already begun to try testimonials.
Larry Sprung, founder of Mitlin Financial, who started taking them in August, tells ThinkAdvisor in an interview that they "add one more touch point for that potential client to feel comfortable to give us a call."
Sprung, a certified financial planner, relies mostly on referrals but uses social media as a way to "advertise," says the FA, whose firm manages about $85 million in client assets and is the only Carson Partner firm based in New York, according to Carson Wealth.
In the interview, the 25-year advisor, whose practice is in Hauppauge, Long Island, provides five do's and five don'ts for obtaining and using client testimonials.
For example, in the don'ts category, "You can't ask a client to give you a five-star review on Google," he says. "That's entanglement."
Before forming his own firm in 2004, Sprung was an advisor with Bank of America and Salomon Smith Barney.
The do's and don'ts he discusses in the interview come from guidance he has received from Carson. It consists of specific guidelines on "how to do this effectively and what not to do to stay out of trouble," he says.
ThinkAdvisor recently interviewed the Mitlin Financial founder, who was speaking by phone from Hauppauge. Eventually, the question arose: "Who is, or was, Mitlin?"
Answer: The name combines those of Sprung's wife's grandfather, Mitchell, and Sprung's mother, Linda. In memorializing them, the families recall that the two had a strong trait in common: They were great listeners.
This is indeed appropriate for a company giving financial advice.
Here are highlights of our interview:
THINKADVISOR: You've started to use client testimonials as part of your marketing. What's the difference between a testimonial and an endorsement?
LARRY SPRUNG: The SEC rule states that a testimonial comes from a client, and an endorsement is from someone promoting your services, such as a CPA who refers or recommends your services and gives a testimonial.
In my view, they're kind of the same.
Where can clients post testimonials about financial advisors?
They can be left on Google or LinkedIn as well as on Facebook, Twitter, Instagram [and other platforms]. Clients can do "reviews" on Google and "recommendations" on LinkedIn. A "like" is considered a testimonial, too.
What platforms are you using?
Google and LinkedIn predominantly. Those are the two important places. Business people can see them on LinkedIn; Google is more for the general public.
As for other platforms, we don't want to do this everywhere.
But we also get reviews of our podcast, "Mitlin Money Mindset." Somebody rated it one star. That was unfriendly, but if that's the way they feel, that's fine.
You're a Carson Partner. Did Carson suggest or ask that you get client testimonials?
I don't think Carson ever took a stand that we should or shouldn't be doing this, or that they want us to do it.
As a firm, we proactively felt it would add value to the practice and help us build solid relationships.
Carson makes you aware of tools that are available, and it's up to you as a business owner to implement them or not.
Once the rule [went into effect in May], they asked us to hold off, and then they gave us guidance. We started taking reviews in August.
Does Carson's guidance give do's and don'ts about using testimonials?
The SEC [advertising and] marketing rule is, like, 400 pages long. Our compliance team went through it.
We're getting what we can and can't do off the specific guidelines that Carson has provided on how to do this effectively and what not to do to stay out of trouble, in addition to getting [input from] our compliance team.
How do you encourage clients to give you a testimonial?
We request them.
