Digital signatures – growing benefits, diminishing risks
Digital signatures are undergoing a second wave of popularity as advances in technology combined with broader community acceptance drive more professionals to introduce digital signatures as an added service for their clients.
Digital signatures can be used to sign certain types of legal contracts as well as SOAs and ROAs.
While digital signatures bring benefits for clients in terms of using up less of their time and offering greater convenience there are also many benefits from an adviser’s perspective.
Cutting down on travel time
This is the greatest benefit for advisers as it not only reduces their time commitment in terms of travelling to see clients but it also improves the lives of their clients by enabling them to sign documents ‘on the run’ or at other times when they cannot physically get to your office to sign documents. The benefits of using digital signatures are particularly high for those advisers who have geographically dispersed clients.
Advisers in regional areas can drastically reduce the amount of time they spend travelling to see their clients. Obviously, face-to-face meetings will still play an important role in nurturing the ongoing relationship with clients but for smaller issues a digital signature can provide a strong efficiency boost for both parties.
Faster implementation of advice
Advice can often not be implemented without a signature from the client approving the changes. In times of market volatility, any delay in signing documents can often be costly.
Improved data control and security
Depending on the provider, documents that have been signed can be stored electronically in a highly-secure environment. The security technology offered by some digital signature companies is likely to be of a higher standard than the technology available to a small financial advice business. The introduction of the new mandatory data breach notification laws in February 2018 make data security a much higher priority for all businesses. Failure to secure data in the future will only become costlier in terms of remediation and reputational damage.
Client resistance to technology is diminishing
A major reason digital signature technology is undergoing a renaissance is because clients are now more comfortable with technology in general. Once a client has become accustomed to doing their banking on a mobile, the leap to digitally signing documents and entrusting their digital signature to the cloud is a lot more manageable.
What should you consider?
Firstly, you need to ensure that the document you are asking to be digitally signed is permitted under law. State laws vary but most states now recognise a secure digital signature as valid and recognised under law for a wide range of documents. Some documents cannot be digitally signed, often referred to as documents that require ‘wet-ink’ signatures. In these situations, you will need to use a traditional signature approach.
Always do your own research in terms of the legality of digitally signing a document rather than relying on third parties, who can often be self-interested providers of digital signature software.