Compliance continues to be a pressing topic for financial advisers who use social media.
Although advisers are becoming more comfortable with social media and acquainted with compliance regulations, it is something that must be thoroughly understood as well as revisited regularly. For rookies of social-media compliance, here are five things that provide a solid base of knowledge.
Static content : This is fixed, such as website copy, and social-network profiles and background images. The Financial Industry Regulatory Authority Inc. considers this content advertising. It must be preapproved, and any changes or updates must be documented. Those who are unsure if the content is static, ask whether commenting or communication possible. If not, it is static.
Interactive content: This comprises content that is changing and where people can communicate and participate in conversations, such as Facebook and blog posts, Tweets and instant messaging. This type of content doesn't need approval but must be monitored frequently to ensure that it doesn't violate Finra's communication rules. Like static content, interactive content must be archived and recorded.
Archiving: According to Finra, firms must archive all interactive content related to their business. NASD Rules 2210 and 2211 also state that firms must keep all communications for three years from the date of last use. Even though interactive content doesn't have to be preapproved, it is a great idea to have some form of internal approval process or social-media policy to ensure that all postings align with one's company's vision and mission. Those who are in the market for strong social-media archiving software, should check out “The Financial Advisor's Quick Guide to Social Media Archiving”.
The scoop on social-media recommendations: These require common sense. In essence, it isn't appropriate to recommend a product to one's entire network via a post to a social network. It may be appropriate to recommend a product to an individual with whom a financial adviser has been communicating in a private conversation on a social network, but if the conversation becomes that serious, schedule a personal consultation or meeting. Remember, social media is not for offering financial products but for generating leads and positioning oneself as an expert.
Third-party content: This consists of items such as posts and comments that aren't written or approved by one's company. Although an adviser won't necessarily be reprimanded for this content, he or she is still responsible for ensuring that it gets archived and recorded. Again, I recommend that advisers closely monitor and have an internal approval process for third-party posts.
Amy McIlwain is president of Financial Social Media, a consulting firm. This commentary originally appeared on the firm's blog.