Electronic signatures have been legally binding for almost 20 years in Canada, but many financial advisors are only just getting around to using them. They should. E-signatures can reduce paperwork, save time and improve your service to clients.
Back in March 2019, the Investment Industry Regulatory Organization of Canada (IIROC) published an updated version of Guidance Note 19-0051 to hammer home the point that the regulator permits e-signatures as part of investment dealers’ transactions with their clients when handling contracts and consent forms.
IIROC released its original guidance on electronic signatures (Member Regulation Notice MR0177) on Nov. 18, 2002, following groundbreaking federal legislation regarding e-signatures in the form of the Personal Information Protection and Electronic Documents Act.
IIROC’s 2019 guidance warns against using email to accept client instructions, yet recommends advisors use a password-protected email portal or e-signature technology to prove a document has been signed by both advisors and their clients.
“E-signatures have been legal for some time. The ability of firms to put in place the technology to support [e-signatures] has varied,” says Andrew Kriegler, IIROC’s president and CEO. “As a result, there has been some variability across the industry in how this and other technologies have been implemented.”
Clients want this functionality, Kriegler adds: “They’re looking to get a broader range of financial advice and financial services. Delivering that package of stuff to them is hard and requires more innovative solutions.”
An increasingly tech-savvy client base is looking for convenience, easy onboarding and the ability to handle ongoing paperwork more easily.
On the mutual fund side, the Mutual Fund Dealers Association of Canada notes that dealers have been slow to catch on to technologies such as e-signatures, even though the organization released MSN-0016, its initial guidance regarding the technology, on Jan. 23, 2003.
Why would you spend time and effort setting up digital signature technology when paper-based signatures work perfectly well? A big advantage is flexibility.
You can use e-signatures to onboard a new client or conduct other paperwork even if either party is on the road — or on the other side of the world. The same benefits apply for clients who may live 20 minutes away, but lack the time to attend a face-to-face meeting.
Another benefit is speed. Mailing signed paper forms can take days or even weeks. E-signatures can be completed in minutes. Transferring documents electronically also is more secure than sending them in the mail, given that envelopes can be intercepted or misdirected.
The final advantage is organization. Cutting down on paper use in your office makes storage less of a headache. Storing documents electronically, either using an online service or on a local computer, keeps documents accessible and searchable while taking up less physical space.
There are several e-signature services available. One of the most popular comes from San Francisco-based DocuSign Inc. You can use this system to create documents for signing in several ways: upload an existing document stored on your computer to the online service, use a template you’ve already uploaded to DocuSign or grab one you’ve stored on a cloud-based service such as Dropbox.
You can customize your document with names, addresses and other data relating to your client when using DocuSign. You also can highlight specific parts of the document that need a client’s signature. When you’re finished, you enter the email address of the person to whom you’re sending it, then click on “send.”
When the client receives the document, DocuSign’s portal software highlights the parts of the document they must sign. Your client can either sign their name directly using a tablet (using their finger or a stylus) or let the system insert a copy of their name in a font that looks like handwriting. This latter option still counts as a legal signature, because only the client has access to this part of the signing process. Once the document is completed, your client sends it back.
Depending on the sensitivity of the document, you can require the recipient to jump through various authentication hoops to prove identity. However, the simplest option is no authentication: you assume the client is in control of the email account that received the document. Alternatively, you can have your client enter an access code that you send separately or even have the client provide government-issued identification electronically.
Because a central portal manages the entire signing process, you can check up on who has signed which documents using the software’s online interface, and even send a client an electronic nudge after a few days if they haven’t signed yet. The interface also lets you search for documents across various clients.
Other well-known document signing systems include Adobe Sign, from San Jose, Calif.-based Adobe Inc. (the company that designed the PDF file) and Chicago-based OneSpan Inc., which emphasizes its tamperproofing technology. OneSpan creates a strong audit trail, enabling a sender to prove — electronically — what the recipient saw at the time the document was signed.
Most e-signature services have similar features because legal requirements and business concerns demand a high level of security. Ensure that your service of choice ticks the box in areas such as encryption to keep your documents private. Price is another consideration: choose a service with a cost that reflects the document volume you expect for your client workload.
E-signatures can take time to set up properly. But a little planning and preparation can boost your clients’ experience — and your own back-end functionality — dramatically. Who said the paperless office wasn’t possible?