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Category: Regulatory/Compliance
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Technology, Investing, the Internet and you

[Editor’s note: I wrote this article quite a number of years ago and thought it was worth freshening up and sending out once again. Not much has changed in the regulatory world about email communications used for investment transaction purposes. As I found out in 1997, the investment industry grudgingly tolerates emailed instructions and then only too, under very specific circumstances. I've just read an article announcing the "death" of conventional email as things like Twitter and other forms of web based communications are rapidly replacing old technologies like email.]

Don't get me wrong, I still love email.

However, a call from an irritated client about a missing email has prompted me to re-think the way we use email for business purposes.

I like email because:

a) I can reach all of my internet enabled clients at a moment’s notice. I can send all kind of necessary forms, documentation and newsletters to my clients around the world virtually instantly.
b) my clients can send me an email from home or work (if permitted) during or after business hours at their convenience.
c) no badly mangled, inscrutable cell or VOIP calls or messages.
d) no telephone “tag”.

Just a few years ago it seems, email was still a bit of a rarity used only by universities and some large corporations. Nowadays, every business is expected to have email and email/internet has become ubiquitous and has become no more of a novelty than a fax machine.

The investment industry was a late adapter to all of this new technology. Its culture over the past several decades was based on verbal communication. The sudden switch to cyberspace was a bit of a shock to advisors and the firms they work for.

I recall my discussion with the senior IT manager of my company in 1997 who assured me that I needn’t worry about the internet because our firm would never need it or get it!

[The firm oddly enough, disappeared a few short years later. I left before then.]

Although you would think that every major financial firm would absolutely love email because it is a written form of communication, time stamped and a handy paper audit trail to have, such is not always the case.

Although commerce has embraced email wholeheartedly for quotes and contracts and billions ( trillions?) of dollars of business have been transacted via email, the investment industry still treats email as suspect, unproven and even in the 21st century, there seems to be more excuses to discourage its use. 

Controversies aside, according to my in-depth Client Audit survey of my clients done in November 2007, email has now become the #1 preferred method of communication.

Love it or hate it, sometimes technology does cause a new set of problems. Here are some email “failure” scenarios that I have experienced over the past several years:

Failure #1

Never assume email is 100% reliable. If you have sent an investment instruction to your financial advisor, do not assume that he or she will have received it. Even, if it was received, don’t automatically assume it was read or being acted on. Your advisor could be out of the office, at a seminar or off sick. Always ask your advisor to confirm the receipt and execution of your instructions. If you have concerns about security and confidentiality, you should consider acquiring a digital certificate to secure your email communications.

Failure #2

Do not rely on automated email reply systems. Yes, people do go away for holidays or vacation and those automatic out-of-office email response systems may not work properly or may not be prudent to use.  Do you really want to tell thousands of spammers that you are away from home for a two week vacation?

If you do not get an acknowledgement of your email within a reasonable length of time, call the advisor’s office. The plain old telephone is still a pretty reliable piece of technology.

Failure #3

Technology is sometimes its own worst enemy.

Email is great until spammers get hold of your corporate email address. You are now receiving several hundred spam (unwanted advertising) emails for every valid email that you receive.

The tech gurus tell us that the latest and greatest spam filtering software using Bayesian self-learning systems are 98.3% accurate. Isn’t that wonderful! It is, until they tell you that there might be an occasional “false-positive” and the computer thinks your client’s email is spam and deletes it before the advisor gets it. See Failure #1 above.

Solution:

Yes, I like email. However, let’s make sure that if we use it, there are checks and balances in place just in case this technology lets us down on occasion.

1. Make sure your financial advisor acknowledges and confirms your investment instructions. The advisor’s reply should always include your original email instructions.

2. If you do not hear back from your advisor regarding an email, do not assume that you are being ignored. Either send another email or telephone your advisor’s office to confirm. The quality of voice conversations (thanks to cellular and at times –VOIP) is rapidly going downhill [hopefully, this will improve]. Although some investment firms accept investment instructions on voicemail messages, I prefer that you do not. Do however, leave a message requesting a call-back or if your need is urgent, ask the receptionist or sales assistant to track the advisor down. Just like email, if I can't confirm your voicemail instructions because of a cell dropout or solar flare event, I won't be able to execute your order.

3. The use of email for investment instructions is becoming more regulated. I suspect that signed authorization forms to authorize the use of email may be required. Please contact me if you prefer to use email communications to relay investment instructions to me.

Email netiquette:

Here is one final tip that applies to everyone.

These days, all corporate email is likely recorded, monitored and archived forever. In your workplace, what you say and especially how you say it, may come back to haunt you in ways you would never expect.

Be professional and polite even under the most trying of circumstances.

If you have an email horror story to share or a suggestion, please drop a note to me at glenns@belmontvillagefinancial.com.

Oh, by the way, if I don’t reply, call me!