For Financial Advisors Considering Social Media

Doing anything new is difficult because it’s not part of our routine. But from time to time, and for good reasons, we need to change. Computers changed us, the Internet changed us, mobile phones changed us, and so too have social media networking platforms like Facebook, LinkedIn, Instagram, Twitter and others.

These social media platforms have created a new digital forum for everyone. The good news is it’s all free to anyone with access to the Internet. These new digital platforms have over 3 billion active users and they are growing every second. They allow businesses to reach more people, more economically, and with more precision, than any time in history.

It’s great you are considering social media for your business. Social media is still in its infancy and it’s even more true for financial services due to the impact of compliance. For anyone in financial services considering social media, we recommend you first consider the Three C’s: Content, Compliance and Collaboration.

Consider the 3 C’s

Content. Your firm will use social media to publish its thought leadership. It will share how it thinks about the market, the way it works with clients, it will provide information on changes in tax law, views on planning for retirement, elderly care, and so many other topics that your clients value. It will even share company successes and important anniversaries. There are two absolutes to run an effective social media program:

  1. Content must be published regularly across all of your social media outlets
  2. Content must be created at a professional standard, conveying authenticity and including visuals

Since most firms do not have an in-house digital marketing department, finding an agency or hiring freelancers are other possible solutions. Even for firms with a marketing group, a social media program could add a significant amount of work outside of a firm’s current capacity and capability. For firm’s considering adding to an existing marketing capability, we recommend listing and then evaluating the pros and cons of adding to an in-house capability.

Compliance. The compliance rules are many and due to the sheer volume of activity that will be driven by your social media program, plus a good measure of employee advocates and advisors, automated compliance software is a must-have. There are many compliance software packages on the market. Our recommendation is to integrate compliance software that analyzes content pre- and post-publishing. This will prevent content with possible flaws from entering your content pipeline and it will certify compliance after publication in the event a violating message occurs during the process of publishing.

Collaboration. Social media is exciting because it can be used to reach a larger market very economically. Companies are also tapping into their strongest advocates – their employees. To do this effectively and profitably, collaboration and workflow manager software is needed. There are several providers of software to choose from. Our recommendation is to choose a solution that is intuitive, allows you to post automatically to all enrolled social media accounts simultaneously with scheduling, and provides the flexibility to change the workflow steps to meet your requirements. It’s vital that your collaboration workflow management software aligns well with your agency service provider or in-house department and your compliance software.

Why the Three C’s?

The primary reason for the Three C’s is regulatory compliance. It’s not because compliance is complicated, but because adhering to compliance standards requires a well-integrated combination of these three key components. Content, compliance and collaboration must work together as a single unit to have a high-performing social media program.

SEC and FINRA require financial service companies under its authority to follow specific rules of law. When considering social media, which can be utilized as advertising, SEC Section 206(4)-1 applies. This law makes it illegal for any investment advisor registered, or required to be registered, to directly or indirectly publish, circulate or distribute any advertisement unless it complies with very specific rules.

Further, FINRA provided a Guidance Policy in March 2014. Key requirements include:

  1. Record keeping of communications between the business and its audience and retention and retrieval of records back 7 years
  2. Testimonials are prohibited
  3. Suitability ensuring messaging does not contain investing recommendations and does not contain any inappropriate content or language such as “buy,” “sell,” “guarantee” and such
  4. Supervision requirements so that proper monitoring and management is in place to ensure social media policy and standards are adhered to

In order to utilize social media and make a reasonable profit, a company must rely on technology to run an efficient and scalable business. Compliance software is needed to manage collaboration and workflow management In particular, because of the many moving parts:

  • Employees
  • Third-party services
  • Compliance function
  • Approval processes

Additionally, compliance software is needed to identify and manage compliance issues automatically. A supply line of firm-authentic content is also needed. It should be integrated into the process and aligned with the software. These agency services create the content and graphics for publishing that engage clients, communicating the value of your firm’s brand.

All of the 3 C’s are important both individually and as a single working unit. We recommend you evaluate at least two options for each category and then choose the products that work the best as a single working unit.

In future articles we will provide more in-depth information and recommendations on The 3 C’s.

Please give us your feedback and tell us if you found this article helpful in the comments below. Also, let us know what topics interest you the most. For more information on social media compliance software for financial institutions, contact us.

Always yours,