Here are some quick observations on social media compliance issues for financial services firms, following a workshop I attended yesterday at BDI. There were great insights and lively discussions.
First, adoption of social media by financial services firms is still in its early stages, but it’s growing. Since FINRA issued regulatory guidance in January 2010, financial firms have begun to launch social media programs, and some notable early adopters include Met Life, Wells Fargo, and Wedbush Securities, whose equity research analyst Lou Kerner boasts nearly 22,000 Twitter followers. Independent financial advisors are finding their way to LinkedIn, where 103,000 have established profiles, up from 87,000 just a few months ago.
Second, among those firms that have entered the social media sphere, a steering committee comprising technology, communications, business-line and legal representatives has been vital to the process, avoiding missteps and confusion. The group sets policy, ensures compliance and handles issues that arise in real-time. It’s a logical place to start for any firm that wants to get its program off the ground.
Lastly, regulatory-compliance issues needn’t sink a social media initiative. Yes, there are legitimate concerns and caution is warranted, but here’s the good news: The areas of greatest concern are things that aren’t that effective on social media in the first place. The informal rules of engagement that govern the largest social platforms (Facebook, Twitter and LinkedIn) strongly discourage things like product promotions, speculative investment tips and marketing gimmicks – all of which are on the compliance blacklist. At the same time, social-media users generally welcome things that are helpful and useful, such as research, educational material and investment tools, which have an easier time clearing the compliance hurdle.