Social Media Compliance: Yes, You Can Be Both Social and Compliant
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Advisor use of social media is on the rise – and not just for connecting with friends and family. Today’s social, mobile, and web technologies are changing they way we live and work, including the way people give and receive financial advice.
Recent studies show that more than 40% of high-net-worth individuals cite social media as important for accessing information on financial products or services. This creates opportunities for advisors to engage clients and prospects and deepen relationships using social media – and this can all be done while staying compliant.
Here’s a brief outline on what you can find in the compliance update:
Be where your clients and prospects are
- Investment advisor use of social media for business purposes is increasing
- Relevant and personal content shows who the advisor is, helps build strong, trustworthy relationships, and ultimately drives business
To reap the full benefits of social media, it’s important to plan and account for compliance, legal, and branding issues
- Implement a clear and concise written policy
- Provide supervision procedures based on the firms overall risk-based principles
- Have in place a fully compliant technology solution for content retention and retrieval
Avoid endorsements and recommendations about your skills
Advisors should avoid retweeting any tweet from either a securities research analyst or a client who is providing a testimonial about the advisor’s performance or a product or service of its firm.
- Disable endorsement feature
- Don’t accept recommendations
- Add note to profile saying you do not accept endorsements or recommendations
- Third-party content you push out or link to may be considered your own content
Not all social media “likes” are created equal
Whether a “like” or “favorite” is OK under the SEC guidance depends on context. For example, a like from a third party may simply indicate that a visitor enjoyed an article that was shared, whereas a like that an advisor solicits as an indication of a client’s experience with the firm may be construed as a testimonial—the latter does not comply with the rules.
Links to third party sites
According to the SEC guidance, advisors should not link to commentary on third-party social media sites unless they can show all three of the following:
- That the advisor has no ability to affect which public commentary is included or how the commentary is presented on the independent social media site
- That the commentator’s ability to comment is not restricted
- That all comments, both good and bad, can be viewed publicly
Read the full Compliance Considerations for Social Media piece here.
Looking for more information on compliance and regulatory issues? Visit our Resources page.
Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.
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