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A financial advisor can discuss retirement rollover, investment recommendations, or withdrawals during a client call.
Months later, a client might remember the conversation differently, or a regulator might request communication records during an examination.
Call recording provides firms with an accurate account of what was discussed, when the conversation occurred, and which advisor participated.
But what's the best way for financial advisors to record client calls? Let’s find out
Table of Contents
1. Why do financial advisors need call recording?
2. How long should financial advisors retain client phone recordings?
3. How can financial advisors securely record calls?
4. How does iPlum ensure compliant recording for financial advisors?
5.Record complaint client calls with iPlum
Why do financial advisors need call recording?
We'll start by answering the most fundamental question. Why would a financial advisor want to record calls?
Well, call recording for financial advisors serves five main purposes.
1. To comply with applicable recording and recordkeeping rules
Financial advisors don't operate under a single universal call-recording rule. Their obligations depend on their registration, firm classification, services, and the conversations they conduct.
For example, SEC Rule 204-2 requires registered investment advisers to preserve specified written communications related to advice, recommendations, client funds, securities, and orders.
FINRA Rule 3170 creates a more specific recording duty. Firms classified as taping firms must record all telephone conversations between registered representatives and existing or prospective customers.
Meanwhile, certain firms regulated under CFTC Rule 1.35 must record oral communications related to commodity-interest transactions.
Therefore, firms must identify the exact regulations and internal policies governing their advisors.
2. To document financial advice and client instructions
Client calls can contain investment recommendations, trade instructions, rollover discussions, account changes, withdrawal requests, and fee explanations.
A recording preserves the exact words used during the conversation. It establishes when the call happened, who participated, what the advisor recommended, and how the client responded.
For example, a client can call months later and question why an advisor recommended moving retirement funds into a different account. The recording can confirm the information presented, the alternatives discussed, and the instructions provided by the client.
While recordings don't replace written disclosures, account records, or advisor notes, they add an audio record that compliance officers can compare with the firm's other documentation.
3. To resolve client complaints and disputes
A client complaint can hinge on a single statement made during a phone conversation.
The client can claim that the advisor guaranteed a return, failed to disclose a fee, or carried out an unauthorized transaction. Meanwhile, the advisor can remember explaining the investment and receiving verbal approval.
A recording allows a compliance officer to review the conversation and establish what both parties said.
It can confirm if the advisor explained fees, discussed investment losses, presented alternatives, or received client authorization. As a result, the firm doesn't have to depend solely on conflicting memories or incomplete notes.
Recordings can also protect clients when an advisor gives misleading information or ignores company procedures.
4. To apply firm policies to mobile calls
A business call doesn't stop being regulated because an advisor answered it on a smartphone.
However, office recording systems can miss conversations made through personal mobile numbers. The firm can then have records of desk phone calls, but not of mobile discussions involving investments or client instructions.
A dedicated business number with automatic recording applies the firm's communication policy to approved mobile calls. Advisors can speak with clients at the office, at home, or during travel using the same business line.
Meanwhile, personal calls remain separate from regulated business communication. Administrators can also define which users require recording and who can access the resulting files.
5. To prepare for regulatory examinations
Regulators can request communication records during an examination or investigation.
A firm must then locate the relevant calls, confirm their dates, identify the advisor involved, and provide them in the required format. Searching through individual phones or unlabelled audio files can make that process difficult.
A properly indexed call archive allows authorized staff to search recordings using the advisor, date, or phone number. Access logs can also show who listened to or downloaded a file.
FINRA-taping firms must catalog recordings by registered representative and date. Therefore, organized call records make it easier to respond to regulatory requests and demonstrate that the firm followed its written procedures.
However, recording the call is only the beginning. Firms must also retain it for the correct period.
How long should financial advisors retain client phone recordings?
Financial advisors should retain client call recordings for the period set by the regulation or company policy governing the conversation.
Depending on the advisor's activities, the minimum period can range from one to six years. A company can also require a longer retention period through its written communication policies.
Here's how the main federal requirements compare.
FINRA Rule 3170: at least three years
FINRA Rule 3170 requires taping firms to retain recorded telephone conversations for at least three years from the recording date.
Recordings from the first two years must remain readily accessible. The firm must also catalog them by registered representative and date.
However, the three-year rule applies specifically to recordings created under Rule 3170. It doesn't impose a universal three-year period on all financial advisors or FINRA members.
FINRA Rule 4511: at least six years when no other period applies
FINRA Rule 4511 requires FINRA members to preserve required books and records for the period stated under the applicable rule.
When FINRA rules and Exchange Act rules don't specify a separate period, the firm must retain the record for at least six years.
Rule 4511 governs record preservation. It doesn't require all calls to be recorded. Therefore, firms should first establish if the recording qualifies as a required business record.
SEC Rule 204-2: generally, at least five years
Records governed by SEC Rule 204-2 generally require preservation for at least five years from the end of the fiscal year in which the last entry was made.
The first two years must remain readily accessible in an appropriate office of the investment adviser.
However, Rule 204-2 doesn't classify all client calls as required records. The five-year period applies when the recording falls under the rule or the investment adviser's written retention policy.
CFTC rules: at least one year for required oral communications
CFTC Rule 1.31 requires regulated entities to retain oral communications for at least 1 year from the date of the communication.
Electronic records must remain readily accessible throughout the applicable retention period.
Other transaction records subject to CFTC regulations may require longer storage periods. Therefore, firms dealing with commodity interests, swaps, or related transactions should identify the record category before setting a deletion date.
Company policies can require longer retention
Several requirements can apply to the same company. For example, an advisor can operate under FINRA rules, SEC recordkeeping requirements, and an internal policy requiring longer storage.
Compliance officers should document which calls require recording, how long the company will retain them, and when deletion is permitted. They should also configure the recording system in accordance with the approved retention schedule.
However, retaining recordings for the correct period isn't enough. The company must also protect them against alteration, deletion, and unauthorized access.
How can financial advisors securely record calls?
Financial advisors can record client calls securely through a secure business line with automatic recording, consent notices, encrypted transmission, protected storage, and restricted access.
It is worth noting that a standard recording app on a personal phone doesn't provide the administrative or storage safeguards required for regulated financial communication.
Here's what a secure call-recording process should involve.
Use a separate business phone number
Personal mobile numbers can mix regulated client conversations with private calls.
A separate business number allows the company to apply recording, retention, and access policies only to business communication. Personal conversations remain outside the recording system.
The number should belong to the company or remain under its administrative account. As a result, compliance officers retain access to required records when an advisor changes roles or leaves the company.
Advisors can still use their existing smartphones, provided calls go through the approved business number.
Record incoming and outgoing calls automatically
Manual recording creates room for missed conversations. An advisor can forget to start recording or activate it after discussing important financial information.
Automatic bidirectional recording starts when an incoming or outgoing business call begins. It records both sides of the conversation and removes the manual activation step.
Companies should also prevent users from disabling recording when a regulation or company policy requires it. In addition, the system should apply the approved settings to calls placed through carrier networks and Wi-Fi.
Play a recording consent announcement
Secure recording also requires lawful consent.
Federal law generally permits recording when one participant gives prior consent. However, some states require consent from all participants.
Interstate calls can raise additional legal questions because the advisor and client may be located in states with different consent rules.
Companies can address this through an automated announcement at the beginning of the call. The announcement should inform the client that the recording is about to begin.
Legal counsel should approve the announcement and explain what an advisor must do when a client declines recording. Continuing through an unrecorded channel might violate company policy or an applicable recording requirement.
Store recordings in a tamper-resistant archive
Recorded calls shouldn’t remain as ordinary audio files on an advisor’s phone.
SEC Rule 204-2 requires investment advisers using electronic storage to protect required records from loss, alteration, or destruction. Access must also remain limited to properly authorized personnel and SEC representatives.
Broker-dealers subject to SEC Rule 17a-4 can use non-rewriteable, non-erasable storage or an electronic system with a complete audit trail.
The recording provider should also encrypt calls in transit and stored files.
Restrict access and record user activity
Client calls can contain account information, financial details, and personal data. Therefore, access to recordings should depend on the user's responsibilities.
Advisors can access their own business calls, whereas compliance officers and authorized administrators can review company records.
The system should document when a user listens to, downloads, or exports a recording. Password policies and account permissions should also prevent unauthorized entry.
How does iPlum ensure compliant recording for financial advisors?
iPlum provides financial firms with the technical controls needed to apply their call-recording policies to mobile communications.
Here's how it works.
An advisor places a client call through a dedicated iPlum business number. The recording announcement plays, the recording starts automatically, and the completed file is placed in a protected archive.
Meanwhile, the advisor's personal number and private calls remain separate.
While you must still determine the retention period and approve the consent procedure, iPlum provides the communication and recordkeeping features required to apply those decisions.
Here's how it does it.
It separates business and personal calls
iPlum adds a secure second phone line to an advisor's existing smartphone.
Advisors can select a new local or toll-free number. They can also port an established business number into iPlum.
Calls made through the iPlum number are subject to your firm’s recording and retention settings. That way, personal calls made through the advisor’s primary number remain outside the business archive.
Your firm also retains administrative authority over the business line if an advisor changes roles or leaves.
It records incoming and outgoing calls automatically
The iPlum Enterprise plan provides automatic bidirectional call recording.
With this feature, recording begins when an advisor receives or places a business call. The advisor doesn’t need to press a button or remember to start recording after the conversation begins.
Automatic recording provides FINRA-taping firms with a method to capture calls between registered representatives and clients or prospects. Other financial firms can apply recording in accordance with their approved communication policies.
It plays an automated consent announcement
iPlum can play a recording disclosure at the beginning of incoming and outgoing calls.
The announcement informs the client that the conversation will be recorded before financial information is discussed. As a result, the disclosure becomes part of the call record.
While you can use the announcement as part of their call-recording consent procedure, legal counsel should approve the wording and determine what advisors should do when a client declines recording.
It stores recordings in a WORM-compliant archive
iPlum uses WORM-compliant storage for regulated communication records.
For starters, WORM stands for write once, read many. After iPlum stores a recording, users cannot rewrite, alter, or erase the original file.
The Enterprise plan also provides ten-year archiving for calls and text messages. Firms can therefore set retention policies for records subject to three-, five-, six-, or longer-year requirements.
Recordings remain searchable and exportable for compliance reviews, regulatory examinations, and client disputes.
It encrypts communication and restricts access
iPlum encrypts business communication during transmission and storage. Its financial mobile compliance solution also provides administrators with tools to manage users, password policies, and account permissions.
Compliance officers can search recorded activity, retrieve files, pull audit logs, and generate reports from the company account.
Role-based permissions limit archive access to authorized users. Therefore, an advisor can use a personal smartphone without storing regulated recordings as editable files on the device.
It archives business text messages
A client conversation can start with a phone call and continue through text. Therefore, recording calls alone can leave part of the communication record outside the archive.
iPlum provides bidirectional WORM-compliant text archiving for financial services. As a result, incoming and outgoing business messages are archived in accordance with the approved retention policy.
Financial firms can then retrieve call recordings and business texts when responding to an audit, complaint, or regulatory request.
Record complaint client calls with iPlum
Financial advisors need more than saved audio files for compliance. It should automatically record incoming and outgoing calls, announce the recording, protect stored files, apply approved retention periods, and restrict access.
iPlum offers these capabilities through a dedicated business number on your existing smartphone.
With the number, you can separate personal calls, archive recordings in WORM-compliant storage, preserve business texts, and retrieve communication records during audits or disputes.
Choose iPlum’s Enterprise plan and get your compliant line today.
