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February 09, 2011 at 07:00 PM
Among financial advisors, 62% agree that social networking is here to stay and will have a lasting impact on the financial services industry, according to Rydex Advisor Benchmarking.
Our recent blog post, “Creating a social media policy for your organization,” received a lot of positive feedback — and more than a few questions. In response, we have put together a more in-depth overview of social media compliance guidelines for financial advisors based on FINRA’s Regulatory Notice 10-06.
In the most basic sense, FINRA has determined that any registered representative who participates in a social media networking platform is subject to the same regulations that would govern an in-person presentation or public appearance. In other words, Internet-based social media communications must be viewed and monitored in the very same way as in-person conversations and written communications.
Social networks provide firms the opportunity to engage with and provide value to their clients and prospects. However, they are not a place to advertise and push products and/or services. They act as an arena to connect with and educate clients and prospects, thus positioning yourself as an expert. The same rules for suitability apply online as they do in person. If a product is not suitable for your entire network (and it probably never will be) don’t post it.
There are two main types of content regulation: static and interactive. Static content includes website content, social network profiles and background images. Static content is considered to be the same as an advertisement and requires pre-approval from an agency principal. Appropriate records need to be kept of all content and changes made. The other type of content regulation is interactive. The majority of social media usage will fall under interactive content as participation in social media is a continual dialogue and is first listening, then contributing to the conversation. Examples of interactive content include blog posts, tweets, Facebook status updates, LinkedIn updates, comments, instant messaging and webinars.
