The Surprising Data on Text-Message Usage by Advisors and Clients

By Jonathan Maddock, Redtail Technology

(originally appeared at Advisor Perspectives)

As a Millennial, I wasn’t around when email was adopted by the financial services industry, but its trajectory was probably similar to what we are witnessing with text messaging. Long-tenured advisors have told me email adoption was slow as well. Because email is and has been a staple of advisor-client communication for many years, it’s easy to forget the challenges the industry faced during its early days.

From broker-dealer concerns about compliance to worries about home computer usage, adoption took time.

While the glacial pace of adoption may feel familiar for those who have had to deal with email and texting, the technological environments during which these two forms of communication struggled for acceptance are markedly different in one respect: the pace of technological change. Technological change is much faster now than when email was gaining popularity. With this accelerated pace comes accelerated expectations from those using “new” technologies.


  • Your clients and prospects already text regularly. They are comfortable with text messaging as a communications platform, and they expect others to know when a text is more appropriate than a disruptive phone call or an easily missed email.
  • You provide your clients better service when you text when it’s appropriate (when a phone call would be disruptive or unnecessary, when a timely response is necessary and an email is unlikely to be answered quickly).
  • You risk falling behind those who have embraced texting as an everyday part of their communications arsenal and who are competing for your clients and prospects.
  • You need to be able to use the most expeditious way possible to provide just-in-time information. As but one example, when market volatility occurs, having the ability to quickly reassure your clients via text can help assure them you are there.

That we are even talking about texting as if it’s a newcomer on the communications scene would be amusing were it not indicative of the types of regulatory challenges we face in this industry. However, technologies have paved the way for making new communications channels compliant in the past, and this is why advisors and broker-dealers should direct their attention to texting. It’s not a matter of if texting is going to become a part of your communications with clients, but rather a matter of how and when you are going to incorporate it – and, if you are going to do it in time to keep up with your competition.

More than 80% of Americans text regularly, but fewer than 10% of advisory firms are using texting to communicate with their clients. Were you to compare email usage at the time of its adoption to text messaging now, you’d quickly see Americans are already texting at a rate that eclipses email usage at that time. So, while staying compliant is as important as ever, you must prioritize putting the systems in place to meet client demands to communicate in what is now one of the most common forms of communication across generations. Put bluntly, if you don’t incorporate texting into your practice, you run the very real risk of appearing out of touch, which could cost you business.

As this technological change is occurring during the beginning phases of the great wealth transfer, (where the generations that are most comfortable with newer technologies are beginning to seek out financial advice), it’s even more imperative to act now to position your firm as ready to communicate with them in the channels where they live.

According to the J.D. Power 2018 U.S. full service investor satisfaction study, investors who receive communication through texting are more satisfied with their investment firm. Millennials’ satisfaction is 58 percentage points higher when their advisors use digital channels to communicate! Firms and advisors seeking to sustain or increase their contact frequency to meet increasing investor demands will need to incorporate digital channels into the mix, obviously in a way that reflects the unique preferences of individual clients.

When you couple this with another key finding from the study stating “Millennial attrition risk [is] four times higher than other generations,” the need to treat their communication preferences seriously is perfectly clear. The great wealth transfer means money is on the move, but who ends up managing this money is unsettled. If your firm isn’t doing everything in its power to meet the accelerated expectations of clients and prospects who embrace technological change, you risk becoming the advisor equivalent of an unread email, while your competitors reap the benefits of having opportunely adapted to a changing technological landscape. I’m not arguing for recklessness in adopting text messaging, but we need to move away from deliberation so cautious it effectively serves as an anchor, preventing us from moving forward and meeting our clients’ needs.



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