Compliance issues weigh on social media use
Click to Print This Page
Social media use is exploding, especially among the over-50 crowd. The typical image of social networking as a tool primarily used by teenagers couldn’t be more wrong: social media use is growing the fastest among older Americans, according to the Pew Internet and American Life Project.
So your clients are using social media; if you’re not there, you may have trouble distinguishing yourself from the crowd. While social media is a rapidly evolving space, the major venues—at least currently—are Facebook, Twitter, LinkedIn, and YouTube. Each has an individual identity, with the most business friendly site, at least ostensibly, being LinkedIn.
What’s most important in regard to managing social media is having a policy, enforcing it, and having evidence that it’s enforced. More social media firms that work in the advisory space are offering compliance-friendly software and applications so that firms can monitor and archive social media activity. Even if a firm’s policy is to forbid all social media use, there still must be a policy and evidence that the policy is actually enforced.
This is more important than ever in light of the news that FINRA is conducting social media audits at the firms it regulates. According to the Socialware blog, FINRA has been conducting audits surrounding use of LinkedIn. Firms are being notified that many LinkedIn profiles violate agency standards. Currently, FINRA offers this guidance on social media use and is considering offering updated guidance based on the rapidly evolving nature of social media.
In brief, FINRA requires regulated firms to:
- Retain records of all social media activity
- Be careful not to recommend securities on social media platforms
- Get approval from Compliance Departments on blog posts
- Supervise electronic communications
- Establish policies and procedures regulating social media activity
- Enforce any policies and procedures
- Provide evidence that such policies were enforced
Unfortunately, a Socialware survey in 2010 revealed that 40% of the advisors surveyed admit that they knowingly violate their firm’s social media policy to network on social media sites because of the business benefits. Not good.
There are more social media compliance solutions than ever before in the marketplace, including Socialware, Arkovi, and LinkedFA. If your firm doesn’t have one, and you’re in a position to do something about it, do it. If you aren’t, at least follow whatever policy is in place or you’ll be taking a big, unnecessary risk.
There are many marketing firms that can also advise financial-related firms on social networking issues, including Rock the Boat Marketing, Wired Advisor, and Wealth Management Marketing. These marketing social media mavens also maintain blogs that keep up on the rapidly evolving social media-financial advisor space and are worth keeping tabs on.
–Amy E. Buttell