Video Testimonials for Financial Advisors
David Vogel

David Vogel

David Vogel is a video marketing strategist who helps businesses leverage the power of video to help them grow their businesses. His 100% remote video production solution allows businesses to create professional video content without the complexity or expense of an in-person video crew.

Revolutionizing Advisor Marketing: SEC Marketing Rule Allows Client Video Testimonials

For decades, the US Securities and Exchange Commission (SEC) prohibited financial advisors from using testimonials and endorsements to market themselves. Just soliciting a client to provide a review or video testimonial was against regulations. But that all changed in December 2020 with the SECs new marketing rule, which states that investment advisors can now ask for testimonials and endorsements and publicly share them online.

You are welcome to read the amendments to the Investment Advisers Act of 1940 in the SEC’s 430-page Investment Advisor Marketing final ruling. The SEC also sent out a press release, SEC Adopts Modernized Marketing Rule for Investment Advisers on December 22, 2020, which highlights what is in the 400+ document and shares the amendments to SEC Rule 206 (4)-1.

Client video testimonials have been long recognized as one of the most powerful marketing tools for businesses. Thanks to the SEC marketing rule, individuals in financial services can now enjoy the benefits others have been enjoying for decades—using client reviews, specifically client video testimonials, to build trust in an authentic way.

SEC marketing rule now allows financial advisors to use client video testimonials

Why Does the New SEC Marketing Rule Matter?

Your best salespeople are your happy customers. That is why most of your business comes from client referrals. When someone has a positive experience, they share it with those they know. That happens even more, today, thanks to social media. And part of their process will be discovery and validation.

81% of people go online before making a purchase decision

What is the first thing we do before making any buying decision? We go online and do research. We do this to validate our decision. 81% of us research online before making a buying decision (Oberlo). People will visit you out on your website, read your Google reviews, and check your social media.

To some extent, financial advice has been commoditized. Every financial advisor has access to the same stocks, bonds, and mutual funds. As a result, there is much sameness in the financial products available today.

What is the #1 reason why someone chooses their financial advisor? Trust. People do business with those they know, like, and trust. If they don’t trust you, they won’t buy from you. And to establish trust, you can’t just share facts about where you were educated and the services you provide.

To establish trust, people want to know how well you have worked with your clients. And there is no better way to get that validation than to hear from someone who has already worked with you. Thanks to the SEC marketing rule, client video testimonials are going to be a game-changer for financial advisors. It gives people a better understanding of you and allows you to build rapport and establish an emotional connection.

80% online reviews the same as personal recommendations

With client video testimonials, financial advisors finally have a tool that can make them stand out from the competition, allowing them to build trust not over weeks or months but within minutes.

Why are video testimonials better than written reviews?

When a client leaves a written review about you on Google, Facebook, or Yelp, you have no idea what they will say about working with you. Most people actually struggle with written reviews because they don’t know what they are supposed to say. In the end, they share something so benign that it doesn’t provide any substantive value to the reader.

Granted, you will have the same issue if you leave it to your clients to record their video testimonials. Unlike a written review, with a video testimonial, you have the added concerns of the quality of the video and how well they deliver their testimonial.

Hiring a professional is the best way to go. Not only will it look and sound good but because they use an interview-based approach you can be confident that the story that is told will be impactful. As much as you won’t have complete control over what they say, when you ask great questions, you get great answers. Unlike a written review, with a client video testimonial, you to see the person and feel their emotions.

More importantly, from a compliance standpoint, platforms like Google or Yelp are not designed to accommodate or include disclosures. However, with a client video testimonial, you can include your disclosure right in the video.

What makes a testimonial and endorsement different?

With the changes to the SEC marketing rule, a financial advisor can now ask for reviews from clients, past clients, and even acquaintances who can vouch for you to help people considering hiring you.

The SEC marketing rule defines a testimonial as content from a current client where the client hasn’t been compensated for their testimony. Conversely, an endorsement is a testimonial from a past client, friend, or colleague who recommends your services and gives a positive review about you.

If you provide cash or non-cash compensation directly or indirectly, the testimonial is considered an advertisement, and appropriate disclosures are required.

Regardless if your review is considered a testimonial or an endorsement, you still need to comply with the disclosure requirements of the new SEC marketing rule and ensure that your policies and procedures are all up to date and aligned with the new rule.

What is the current SEC Marketing Rule?

The new SEC marketing rule requires you have your procedures and policies in place is a prerequisite before financial advisors can start asking clients for video testimonials.

Update Policies & Procedures

The compliance date for the marketing rule took effect on November 4, 2022. I recommend that you review the risk alert sent by the SEC on September 19, 2022 which explains what examinations will focus on.

The first thing that every SEC-registered firm needs to do is go into the written supervisory procedures, remove all their old marketing rule language, and replace it with new marketing rule language, regardless if you will be using testimonials.

At the SEC level, decide if you want to leverage testimonials for your business. If you choose to use testimonials as part of your business, then there are some ADV updates, specifically ADV Part 1, Item 5L, where there are a series of questions you need to answer regarding your marketing and advertising practices.

Your policies and procedures need to be reasonably designed to maintain control over the video content.

  • Who is creating the content?
  • Who is reviewing the nature of the content?
  • What methods of dissemination are you implementing? 
  • How often do you execute your regulatory reviews?

Firms need to have their disclaimers ready to go and in place. There are certain things that those disclaimers must maintain. You have to disclose if you paid someone and if any material conflicts of interest need to be disclosed.

At the state level, you have a unique challenge. Some states may or may not have adopted the testimonial rule. So you have to reach out to your state to be sure.

Fair and Balanced

When regulators look at your client video testimonials, they will look at the intent. What were you trying to communicate? Is it fair or balanced? This can be a challenge, especially because your entire reason for having a video is to drive business. Your client’s experience needs to reflect the nature of the company. Financial advisors are not going to share negative client experiences. However, regulators find it challenging to prove negative client experiences, especially without any client complaints. We recommend that if you invest in client video testimonials, you do at least three to show that you made an effort to get video testimonials from a cross-section of clients.

Past Performance

The SEC marketing rule permits you to include performance in your reviews; however, the disclosure and recordkeeping requirements make this so challenging that it isn’t worth it. You want to refrain from speaking about performance to ensure your video testimonials pass compliance.

Disclosure

Your client video testimonial must clearly and prominently disclose whether the person giving the testimonial or endorsement is a client and whether they were compensated. Additional disclosures are required regarding compensation and conflicts of interest. Under certain circumstances, there are exceptions from the disclosure requirements for testimonials or endorsements by SEC-registered broker-dealers and certain personnel and affiliates.

Here is a list of questions to help make sure you have included everything.

  1. Do you have a Clear and Prominent Section?
  2. Is the Clear and Prominent Section adjacent and visible at all times?
  3. Are Additional Disclosures accessible via a link, QR code, or other method?
  4. Does your Clear and Prominent Section indicate your client’s status?
  5. Does your Clear and Prominent Section define compensation?
  6. Does your Clear and Prominent Section disclose any conflicts of interest?
  7. Do your Additional Disclosures include material terms regarding compensation?
  8. Do your Additional Disclosures include a detailed explanation regarding conflict of interest?

Disclaimer Placement

Traditionally it has been acceptable for advisors to put any disclaimer information at the bottom of a page or blog. The SEC marketing rule requirement with video testimonials is that your disclaimer be prominently displayed. You can’t hide it. I recommend that you include an image at the end of the video with the disclaimer. Make sure that the disclaimer text is large enough that anyone can read it. Keep the slide up long enough for someone to read the disclaimer before the video ends.

Recordkeeping

The SEC marketing rule amended rule 204-2 includes recordkeeping requirements associated with the new marketing rule. As with all materials that fall under the books and records requirements of the SEC, your videos, shared directly or indirectly, must be maintained and preserved in an easily accessible place for no less than five years from the end of the fiscal year during which it was used. Call it six years just to be safe.

Don’t just rely on any of the video hosting platforms like YouTube, Vimeo, and others to upkeep your records. Instead, you should have a digital copy of the video file on your servers to access it easily.

Besides the actual video file, what else do I need to record? A client video testimonial is very different from a blog, for example. A blog is most likely written using word processing software like Microsoft Word. You can easily track and save revisions to that document. You can log the date it was created, who wrote it, who reviewed it, etc. It is very easy to track for compliance purposes. It is also very easy to place disclaimers and disclosures at the end of the document.

Since your client’s video testimonials will be interview-based, there won’t be any written script to record. However, what your client says in the video can be transcribed. We recommend keeping the transcript in your books and records just like you would for a blog.

Keeping track of these materials doesn’t have to be complicated. You can use a spreadsheet to log your information. Here is a suggestion for the information you want to record:

  • Date Interview Conducted
  • Who Was Interviewed
  • Date Video Reviewed
  • Whom Video Was Reviewed By
  • What Comments They Had
  • Date Video Published
  • Where Video Was Published
  • Link To Video
  • What Type Of Video (Testimonial or Endorsement)
  • Where They Paid for Review
  • If Yes, How and What Were They Paid
  • Location of Archived Video File
  • Name of Archived Video File

Having this information recorded gives you evidence of ongoing reviews. This is something a regulator is going to look for if you are subject to an exam.

If you have additional questions, the SEC has a great resource, Marketing Compliance Frequently Asked Questions, that is constantly updates with information relevant to this topic.

Video Testimonial Content Tips

The last thing you want is to get a fantastic video testimonial from a client only to be rejected because of compliance issues. So here are some questions to ask yourself to ensure your Chief Compliance Officer will approve your video.

  1. Does the video testimonial include any material statements of fact that you don’t have a reasonable basis for believing you will be able to substantiate upon demand by the SEC?
  2. Does the video testimonial include any untrue statements of a material fact or omit to state any material fact necessary to make the statements not misleading?
  3. Does the video testimonial include a reference to specific investment advice you provided in a fair and balanced manner?
  4. Does the video testimonial include or exclude performance results, or performance time periods, in a fair and balanced manner?
  5. Could the video testimonial be considered materially misleading?
  6. Does the video testimonial include information that would be likely to cause an untrue or misleading implication or inference to be made concerning a material fact related to you?
  7. Does the video testimonial discuss any potential benefits to clients connected with or resulting from your services or methods of operation without providing fair treatment of any material risk or material limitations associated with the potential benefits?
  8. Does the video testimonial contain an unsubstantiated material statement of fact that can’t be substantiated in your disclosures?

 

How to avoid entanglement and adoption issues?

Suppose someone likes or comments on a written review or video testimonial. In that case, you have entangled yourself with it or adopted that review depending upon the nature of your response or how you use it, like bringing it onto your website.

Entanglement

Entanglement happens when a financial advisor or a firm creates content. If you are a financial advisor and you help your client write a review or compensate them in some way, you are now effectively entangled in that. So if I pay someone in any way, it is no longer a testimonial, but an endorsement and you must disclose that.

Don’t script what your client says to avoid this with your client’s video testimonials. Instead, you want to use an interview-based approach where your clients are asked specific questions about their experience working with you. Additionally, you should avoid compensating your clients for their testimonials. It should be something they want to do and are willing to do.

Adoption

In the early days of social media, many financial firms had issues with likes and comments. If someone likes a post on something you post about the financial markets, they are adopting your position. They effectively agree with what you said. It is almost an endorsement. This can become a real problem if you are doing this, and it causes a reasonable person to take action based on their endorsement. Adoption can also happen if you have a blog on your website and someone leaves a comment.

If you plan to host your video testimonials on YouTube, you want to be sure to turn off comments and show likes. A better alternative is to use a video hosting platform like Vimeo for your videos. Vimeo offers more control over social sharing functionality, especially when embedding a video on your website.

How do you collect and share video testimonials?

There are four different ways you can get client video testimonials. You can ask your clients to shoot a video testimonial on their own using their smartphone or the webcam on their computer. This is undoubtedly the most affordable way, but most likely, it will be unusable because of compliance issues. The next option is for you or someone on your team to go out to your clients and shoot their video testimonials yourself. As much as you know what they can and can’t say, you don’t know the first thing about video production. Most likely their will be issues with lighting, audio, exposure, compensation, and content. And then there is the video post-production process where images are added, graphics designed, and the video is edited. Most likely you don’t have anyone with the expertise so it is an inefficient use of your time.

Since a do-it-yourself (DIY) approach is not viable, your next best option is hiring a video production company. You know you will get a high-quality video that looks and sounds great. They are most likely skilled at interviewing people so you know you will get great content. And with a professional editor you can be confident that the video meets compliance requirements.

But there are two challenges with this approach. First, hiring a video production company to shoot a client video testimonial will be expensive. You can expect to pay a minimum of $2,500 to a video production company to shoot and edit just one client’s video testimonial. That assumes that your client is located locally. But if you are like most financial advisors, you have clients all over the country, if not the world. That means you will have to either find a local video production company near each of your clients or have to pay the travel expenses to send your local video production company to your client? If it is too much work to coordinate or the travel costs get to high, it might not be worth it to get client video testimonials.

I have good news. That isn’t the only way to get professional-quality client video testimonials. At Remote Video Testimonials, we have solved all these problems. We have made it fast, easy, and affordable to get high-quality client video testimonials remotely from anywhere in the world without needing an in-person video crew. Our 100% remote video production process allows us to interview clients when and where they want in as little as 30 minutes. In addition, with our Perfect Answer™ Interview Process, we will get authentic, emotion-based stories that will meet the strict legal guidelines defined in the new SEC marketing rules.

At Remote Video Testimonials, our process generationally works like this:

  • We provide you with a discovery form to learn about your client and why you chose them 
  • We develop custom interview questions based on the answers you provide 
  • We share the final questions with you and compliance for approval
  • We provide a video kit for the shoot that they get to keep
  • We interview your client remotely when and where they want in as little as 30 minutes
  • Our compliance officer reviews the transcript and identifies any compliance issues.
  • We edit the footage into a 2-minute video testimonial
  • We get compliance approval from our compliance officer
  • We share the video testimonial with you for approval
  • Once you and your compliance team are happy with the video, we deliver the final video.

Sharing Client Video Testimonials

And when it comes to sharing client video testimonials, you have so many options. Your website is one of the first places you will want to place your video testimonials. You want them to be on your home page as high on the page as possible. With people spending as little as 8 seconds on a website, you want to ensure they see your client video testimonials. If the page layout doesn’t allow it, ensure you have a button or a clickable link that will take people to the video on your website.

When embedding a video on your website, we don’t recommend using YouTube. The last thing you want to have to happen is at the end of the video; YouTube recommends a video testimonial for another financial advisor. A much better choice is Vimeo or Wistia.

You can also share your client video testimonials in your LinkedIn profile. You can also share your client’s video testimonials on all of the social media platforms, including YouTube, Facebook, Instagram, and others. To learn more I recommend you read 8 Best Ways to Generate More Sales Using Video Testimonials. However, before sharing your client video testimonials online, I recommend you speak with your Chief Compliance Officer or Director of Marketing.

Disclaimer

I am not a compliance attorney. I have provided this information about the SEC marketing rule to help you better understand what is possible with regard to client video testimonials. Before embarking on any new marketing strategy, you should check with your company or compliance officer.

At Remote Video Testimonials, we have developed a fast, easy, and affordable way to get professional-quality customer video testimonials without the hassle or expense of an in-person video production crew. With our 100% remote video production process and our interview-based approach, our virtual video crew can shoot video testimonials anywhere in the country in just 30 minutes. If you would like to learn more about Remote Video Testimonials, please call (914) 677-2588 or email david@remotevideotestimonials.com

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