Why are compliance departments so interested in your writing? Because from the standpoint of industry regulators, marketing your business through articles, blogs, websites and books can be interpreted as advertising. That means that many materials must actually be approved by industry regulatory groups such as FINRA — depending on how an advisor is licensed and regulated — or be vetted by a compliance officer to ensure they don’t violate applicable rules and regulations.
FINRA, also known as the Financial Industry Regulatory Authority, is a self-regulatory agency that oversees U.S. securities firms. In it’s social media guidance, FINRA echoes the stance that most regulators take around reviewing written promotional materials such as articles, blogs and books: “These rules protect investors from false, misleading claims, exaggerated statements and material omissions.”
Regardless of the media — social media, email or print — firms need to adhere to the principal of providing fair and balanced communications. The criteria that meet this standard include:
Includes all “material information
Omits “false, misleading, promissory or unwarranted claims”
Avoids predicting future performance
Provides a “balanced treatment of risks and benefits”
Tailored to the appropriate needs of a specific audience
Avoid promissory language
Ensuring a compliant manuscript isn’t as hard as it sounds. As you already know and I’ve already mentioned, y9ou must avoid promissory language in your writing. This means liberally employing the words “may” and “can.”
Think about how you talk to your prospects and clients — after years of practice, you instinctively know how to avoid promising a specific result. Instead, you educate them about your methodology and how it will position their portfolio for success. Same thing with your writing. This is where client stories, examples, analogies, personal experiences and credible evidence help. These elements explain your points while avoiding promissory language. They show rather than tell your reader, which is powerful.
Avoiding references to specific products is another important component of remaining compliant. Because products change so frequently and may not perform well int he future, it’s much better to refer to products generically rather than mention specific product names.
So, for example, if you’re writing about creating a stream of income for life throughout retirement, a fixed index annuity might be attractive. Generally describe the type of fixed index annuities that you recommend for clients and the characteristics they posses, rather than identifying, say, a specific AIG product that you prefer.
Collaborate with compliance officers
Working closely with your compliance officer or company ahead of time can make a big difference. So, as early as possible in the book writing process, connect with that person and explain what you are doing and why. Assure them that you want to make the compliance approval process as easy as possible and that you will be cooperative and proactive when it comes to addressing any concerns that may arise.
When responding to compliance comments and questions, answer as completely as you can and use the track changes in Microsoft Word so that the compliance officer can see exactly where you made changes. Your changes may alter the context of a statement, so the compliance officer will likely want to see where and how you may a change.
Frequently, one change precipitates an other change. The best strategy here is to go with the flow and be as patient as possible. You can’t win a battle with compliance.
Plan for compliance review delays
Compliance reviews can add weeks to a book’s publication timeline — it all depends on the type of compliance function you have, how busy your compliance officials are, their experience reviewing books and other materials as well as the complexity of your materials. Many of the advisors that I’ve worked with speed up the process by sending on chapter at a time to the compliance department.
How does that work? When the advisor and I finished drafting and revising a specific chapter, we sent that chapter to compliance. We start with Chapter 1, so that compliance can begin review while we work on subsequent chapters. As we received chapters back from compliance with comments, we worked together on revising those to meet compliance approval.
Such an approach can caut the time one on compliance review significantly, because at least half of the compliance review could be completed before finishing the last chapter was finished. While there is nothing wrong with waiting until the end of the book to send chapters to compliance, that approach extends the timeline.
If you follow the approach I outline in Write Your Book and Finish Your Book, you won’t revise until you finish writing. You can still cut the time for compliance review by finishing revising one chapter at a time and getting those completed chapters to compliance as soon as you revise them.
Be warned that your manuscript will have to go through compliance again after editing and proofreading. Why? Because those functions will make changes to the manuscript. You can also wait until editing and proofreading are complied. However, if you submit before editing and proofreading, you will likely eliminate many issues before the final review, making the process faster.
Compliance definitely complicates and lengthens the book publication process, but there is no way around that. It’s a necessary step, so it makes sense to create a process to make it as efficient as quick as possible.