Social media alert: How to remain compliant
The use of social media among advisors is accelerating, and FINRA and the SEC are paying attention.
In early 2019, the SEC released a risk alert regarding advisor use of instant messaging, email and social media. It reminds advisors of the obligations they are under to maintain records of their online business communications.
There’s a huge incentive for advisors to maintain a social media presence.
Social media helps firms and advisors distinguish their brand, provide quick customer service, gain competitive intelligence, and stay ahead of trends, according to research conducted by Smarsh, a financial archiving firm. In fact, the amount of advisors reporting a gain in business through social media reached 92% in 2018, up from 49% in 2013, according to Putnam Investments. In the same time period, personal and business use of social media by advisors increased 10 basis points from 73% to 83%.
However, FINRA and the SEC have published a number of regulatory notices and compliance guidelines that complicate the use of social media for business purposes.
“I’ve been flagged three times [for tweeting] by FINRA, and have had to pay a fine,” says Jon Ten Haagen, advisor at Ten Haagen Financial Group. “Over time you learn what they are looking for and avoid those words, or phrases or topics.”
Developing a social media strategy ahead of time will help firms and advisors meet these obligations while also reaping the benefits of social media exposure.
What follows are the requirements advisors must meet, and tips on how to do so.