Whether it’s LinkedIn, Twitter or Facebook, 85% of financial services professionals under the age of 50 are using social media, according to a survey conducted by On Wall Street and LederMark Communications.

And more than 40% of younger users said that it has led to doing business, said Gerri Leder, president of Baltimore-based LederMark. That compares to only 19% of those over age 50. The younger set prefers LinkedIn for business and Facebook for personal matters.

But compliance issues, especially at large financial institutions, remains problematic.

“This is an area of intense debate and focus in the industry,” Leder said. Younger professionals “are adopting social media at a feverish pace suggesting that we haven’t heard the last of this.”

The survey found that younger financial professionals are doing business at a rate of two to one when compared with their older counterparts, she said.

As social media gains popularity, especially for business purposes, firms are grappling with how to best use the technology while not running afoul of regulators. The survey discovered that the number one reason respondents didn’t use social media at or for work was because company policy prohibited it. The second reason was compliance concerns and the third, especially for the over-50 crowd, was lack of understanding of the sites.

“Whether it’s a no-use policy, unclear parameters or daunting approval processes, there is frustration among those who want to utilize social media for their practice and do it by the book,” Leder said.

For those who do get to use social media at work, they are limited. Most are allowed to create a profile but not much more, the survey found. They cannot post recommendations from clients or friends, they cannot blog or engage in discussions, or even link to their business website.

The survey, conducted last week, included 175 financial services executives from national financial services firms, independent financial advisors, regional firms, asset management firms and others. The largest groups of respondents were financial advisors/brokers at 47% and registered investment advisors at 12.4%.

In January, FINRA released a regulatory notice on social media websites. In the notice, the self-regulatory agency stated that firms that intend to communicate or permit its “associated persons” to communicate through social media sites must first make sure that it can retain records of those communications. FINRA also stated that if a firm or its employees recommends securities through such a social media website, such an action may trigger the suitability rule and create “possible substantive liability for the firm or a registered representative.” In addition, FINRA said that firms, in certain circumstances, must supervise the communications by the firms and their reps on blogs and sites such as Twitter, LinkedIn and Facebook.

Frances McMorris was named editor-in-chief of ON WALL STREET in February 2008, after serving as executive editor since December 2004. She also created and serves as the host of AdvisorTV, an online video interview show appearing at onwallstreet.com.

From indictments to verdicts and appeals, Ms. McMorris has covered many major, high-profile cases in both federal and state courts as a legal affairs reporter for The Wall Street Journal, The New York Daily News, Newsday and The New York Law Journal. The cases that she has covered include: the seditious conspiracy trial of Sheik Oman Abdel Rahman, the blind Egyptian cleric convicted of being the spiritual mastermind of the 1993 World Trade Center; the constitutional battle over the “Don’t Ask, Don’t Tell” military policy; the Crown Heights riot murder trial; federal racketeering cases against violent gangs; the Long Island pet cemetery trial and several securities fraud and insider trading cases, among others.

The legal issues she has written about are diverse and numerous, ranging from economic espionage to employment discrimination rulings and the first story to report that there is no expectation of privacy for employee emails written in the workplace.

Ms. McMorris is a 1993 graduate of Fordham University School of Law and admitted to the New York and New Jersey bars. She has appeared on the former CNNfn to give expert commentary on trials.

She also served as president of the Newswomen’s Club of New York for three years while working as an assistant managing editor at The Daily Deal in New York.

ON WALL STREET magazine has a circulation of more than 90,000—reaching financial advisors and brokers at the most prestigious brokerage firms who serve high-net-worth and ultra-high-net-worth investors.