In 2000, the ESIGN Act established the principle that electronic signatures and corresponding records are given the same legal status as wet ink signatures and paper records.
Nearly two decades later, some broker-dealers and RIAs still haven’t integrated esignature solutions into their processes, frustrating advisors and clients alike.
Esignatures are one of the first steps on the path toward greater efficiency for investment firms. They are a vital component of paperless operations, and they can speed up the pace of transactions and make it easier to attract advisors and onboard new clients. Without an effective esignature system, the reliance on paper processes will persist and the benefits of a paperless office will not be realized.
Let’s take a look at the four major advantages of esignatures for broker-dealers and RIAs:
1. Easy Compliance with SEC and FINRA Rules
Firms that have yet to implement esignature solutions may be hesitating because they are afraid of regulatory consequences. When the risks of doing something against SEC or FINRA rules are so high, it’s often easier to just maintain the status quo — in this case, total reliance on wet ink signatures.
However, both the SEC and FINRA have given their blessing to the provisions of the ESIGN act, essentially ensuring that esignatures will be accepted by their auditors as long as they follow all existing regulations concerning record-keeping and disclosures.
Many wealth management professionals might be confused about how these regulations apply to electronic signatures, but the good news is that for the most part, they don’t have to worry about it. When esignatures are implemented as part of a wealth management-specific paperless platform, compliance is built right in.
In fact, one of the advantages of electronic signatures is that they enable simpler electronic storage of forms and documents, which can actually improve compliance by eliminating lost or missing files and speeding up audits.
2. Faster Turnaround on Important Paperwork
In addition to the regulatory benefits, esignatures help reduce the time it takes to process paperwork.
On a purely wet ink system, documents need to be printed and then signed in person, or faxed or mailed to recipients. This is a resource-intensive process that requires staff, printers, papers, and postage. All of the steps involved create possibilities for delays.
Once established, esignature solutions allow documents to be signed in a matter of minutes with all of these time-intensive steps removed.
3. Greater Convenience for Clients
Another one of the main advantages of a digital signature is that – for many clients, especially younger ones – the idea of being required to sign documents in person is foreign. Many millennials don’t even own printers or scanners, and may find it inconvenient to access these devices. In addition, coming into your advisor’s office in the middle of a workday to sign some papers is a chore — especially if it’s due to some kind of mistake or mishandling of paperwork.
In an industry that’s as competitive as financial advising, inconveniencing clients can be enough to drive them away. In order to ensure that your firm is welcoming all clients while providing them with the convenience they expect in our smartphone-centric, app-based world, it’s essential to make esignatures an option.
Some advisors might protest by saying that when clients come in to sign paperwork, it facilitates additional discussion and business opportunities. However, the downside of inconveniencing clients likely outweighs this small benefit.
4. Reduced Costs
Using electronic signatures helps cut down on costs across the board. In order for clients to sign documents using the wet ink method, the paperwork must be printed, then either faxed or mailed. This process doesn’t just use resources like paper, printing, and postage; it’s extremely time-consuming for staff.
In addition, when wet signing a packet of documents, the chances of missing a signature increases. This leads to NIGOs, which frustrate clients and cause even more costly delays.
Esignatures, when implemented alongside other paperless office workflows, help eliminate NIGOs in addition to reducing printing, faxing, and mailing costs.
Esignatures are a key factor in moving toward a paperless office that provides greater convenience for clients, faster transaction speeds, and more effective compliance. Widespread adoption of esignatures by your firm can help improve the client experience while reducing costs.
Interested in learning more about how Docupace can help make the transition to e-signatures simple? Contact us today for more information!
