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Today, less than 40% of Americans have a landline.
Just about every one of us now does most of our daily communicating on our mobile phones, so it may make sense to start receiving important messages from our mutual funds there too.
Some proxy service providers are content to promote print and call programs — but in reality, digital communications have been proven to help funds achieve their proxy goals. Text messaging combined with social media advertising has been shown to significantly boost voting rates. Best of all, text messaging and social media are comparatively cost-effective, especially when compared to mail and phone campaigns.
In 1991, the Telephone Consumer Protection Act (TCPA) was passed in order to place limits on how consumers could be contacted via cell phone. One of the effects the TCPA had on mutual funds was limiting the use of auto dialers in sending unsolicited, prerecorded calls to landlines. This was an important protection at the time, but it’s 30 years later, and we’ve moved way beyond home phones.
It’s time to acknowledge the change in how we communicate with our shareholders and to adjust our business approach accordingly. Mutual funds can communicate with shareholders who have consented to being contacted by phone, but they are limited for the most part to contacting landlines. The TCPA limits access to cell phones unless dialed directly. Shareholders who have consented to phone contact are considered non-objecting beneficial owners (NOBOs) and this includes registered owners (who have purchased shares directly from the fund but have not requested to be placed on a do-not-call list). Shareholders may be contacted in a variety of ways and text messaging can increase shareholder participation. Wider use and varying times can increase the vote. Starting with a simple text earlier can have positive outcomes. Additionally, demographics support this approach, as millennials are the fastest growing segment of investors—and you need their votes.
You can send reminders to vote via text if your shareholders have previously opted in or if they contact you directly. Texts are easy to respond to, and recipients can be directed to a website where their vote can be recorded quickly. Digital responses do not require any forms, envelopes, or trips to the mailbox. The long-term solution will be to have the TCPA regulations updated to better support texting in situations where ownership supports access.
Broadridge is actively working to build our operational infrastructure to better support preference management, consent, and text delivery. At the same time, we’re always collaborating with regulators and other industry leaders to find innovative ways to solve for today's challenges. This includes forming an advisory committee with fourteen high-value mutual funds (with a combined total of nearly a trillion dollars in managed assets) to help all mutual funds use technology to better service their shareholders in the future.
We encourage asset managers to advocate for innovation—including texting.
If you would like to take a deeper dive into the possibilities of digital technologies for mutual fund voting, please download Next-Generation Proxy Voting Strategies for Asset Managers.
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