Financial professionals, 86% of whom have at least one social media account, risk running afoul of compliance rules as regulatory bodies sort out the rules for advisors’ use of these new channels. That was the message from social medial expert Alexandra Basak Russell, at the Women Advisors Forum in Huntington Beach, Calif.
For now there are a few guidelines planner should keep in mind to stay FINRA-compliant, Russell said. They include:
1. Create and maintain a clear social media policy and train your staff on it. Or learn your company’s own policy. It’s not possible to supervise employees who aren’t aware of the policy, Russell said, adding that people can’t ask permission for each and every tweet or Facebook post.
2. Don’t get into trouble by posting about, recommending or even talking about investment products. “Suitability is one of the biggest places where social media has the potential to get advisors into big trouble,” Russell said. In July, for the first time ever, a financial advisor was fined by FINRA for using Twitter to recommend a stock in which her family was invested. She did not disclose that fact. The punishment: a one-year suspension and a $10,000 fine.
3. FINRA makes a distinction between static and interactive content. Static content would include a Facebook profile that is expected to stay up for a long period of time. FINRA regards this as an advertisement, Russell said. Interactive content, including tweets and posts that change over time, are considered spontaneous and not regulated as highly. However, planners must monitor client posts to their walls and remove any that are misleading.
4. To remain in compliance, firms must capture a record of all tweets and posts, including those that are removed for being deemed inappropriate. All communication with the public must be retained.
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