The Big Threat to Your Reputation
February 24, 2015
by Dan Richards
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If you’re a successful advisor, your reputation is your biggest asset. It’s also the hardest won and the most easily lost. In the words of Warren Buffett, “It takes 20 years to build a reputation and five minutes to ruin it.” That’s why user-rating sites like Yelp pose a growing threat; just one or two disgruntled clients can undo years of hard work.
Yelp is the highest profile example of how user ratings work. Best known for its restaurant reviews, Yelp has extended its reach to professionals, including doctors and lawyers. Recently, I talked with a financial advisor named Jennifer who was horrified to discover an extremely negative review on Yelp by an unhappy client with whom she had parted company.
Yelp and other “advisor-ratings” sites give a new platform to former clients who bear grudges. Fortunately, Jennifer demonstrated that you don’t have to be a powerless victim. There are some simple, proactive measures that can help you protect your reputation against unfair reviews.
New rules for social media
Of course, Yelp is not the only example of the rise in user ratings. Tripadvisor is playing a growing role in consumer decisions on hotels or resort destinations. In fact, this site has become so important that a cottage industry has sprung up offering to post favorable Tripadvisor responses for a fee. This is not a unique case. A Bloomberg Business Week article discussed the problem of phony ratings that scam the system.
Despite these flaws, user ratings are growing in importance, especially among a younger demographic of consumers. User ratings are a key factor in eBay’s success. Airbnb is a website that matches people who want to rent private accommodations with people renting a room, their apartment or house. Before finalizing an arrangement, both parties can rely on ratings available on the site. An article in the New York Times described how Uber drivers are also using ratings of passengers to decide whether they’ll pick up a fare.
Historically, the prohibition on testimonials has created uncertainty about where user-generated reviews might fit. But last March the SEC published new guidelines for advisors’ use of social media on their websites that provided clarity. While compliance officers will vary in terms of their interpretation of these guidelines, there is general consensus that advisors are now allowed to include links on their websites to user comments about their services provided that:
- The site is independent of the advisor and his or her firm
- There is no editing of the comments by the advisor
- The advisor has not suggested specific wording or comments.
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