Preparing for the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act went into effect in July 2010. However, some important changes around how investment and insurance companies market their products have yet to be implemented. The massive legal document contains provisions for protecting investors by requiring greater accountability and transparency from financial services companies. Under Title IX, Investor Protections and Improvements to the Regulation of Securities, Subtitle A affirms the SEC’s authority to set and enforce point-of-sale disclosure rules, which have been repeatedly shelved due to concerns they would be overly burdensome to brokers and dealers.

Here’s summary text of the Frank-Dodd Act on WIkipedia.

SEC is specifically authorized to issue "point-of-sale disclosure" rules when retail investors purchase investment products or services; these disclosures include concise information on costs, risks, and conflicts of interest. This authorization follows up the SEC's failure to implement proposed point-of-sale disclosure rules in 2004 and 2005; These proposed rules generated opposition because they were perceived as burdensome to broker-dealers. For example, they would require oral disclosures for telephone transactions, were not satisfied by cheap internet or email disclosures, and could allow the customer to request disclosures specific to the amount of their investment. In determining the disclosure rules, the Act authorizes the SEC to do "investor testing" and rely on experts to study financial literacy among retail investors.

Although a Financial Times article singled out exchange-traded funds (ETFs) as ripe for new rules around advertising, pre-sales disclosures will not be limited to any one type of product and are likely to affect the entire portfolio of products that financial services companies sell to the retail market.

No timeline has been set yet for implementation of new pre-sale disclosure requirements, however the statute does set a six-month window for the SEC to establish a standard. A publication by PriceWaterhouseCoopers comments that the SEC is likely to move quickly to create disclosure requirements that would apply to insurance companies as well as investment banks.

What types of information will be in these new disclosures? One legal analysis reported that disclosures to retail investors will need to cover the objectives, strategies, costs, and risks associated with a product or investment, as well as any compensation or incentive given to the broker-dealer or other financial intermediary as a result of the purchase.

How can a marketing asset management (MAM) solution help? MAM software gives companies a way to dynamically adapt collateral and contracts so they meet the new rules. It works for all types of content, making it easy to make small tweaks to web, print, and mobile marketing materials that contain multiple files each. By creating and sharing design templates, companies can enable distributed teams to create documents that consistently include key elements, such as disclosure text and logos, to meet regulatory requirements. If disclosures need to be tailored for individual products and services, a MAM can support that with digital asset management (DAM) capabilities that let you store and modify a virtually unlimited number of files, and easily find and widely share them using an online interface.

A multichannel publishing platform is also an excellent tool for collaboration, for instance allowing legal reviewers, marketers and outside graphic designers to view and approve completed documents before they go into the retail market. 

Best of all, a MAM solution works across channels, so it can be used to actively market to consumers through the web, print media, ads, electronic newsletters and mobile sites, making sure that marketing content and legal disclosures display properly on any device type.