Commonwealth Financial Network announced Thursday that, beginning in early June of 2011, it would allow its advisors to use social media, including Facebook, Twitter, LinkedIn and blogs.
The Waltham, Mass.-based independent broker-dealer has hired Erado Message Control, based in Renton, Wash., to monitor and deliver compliance that meets FINRA requirements for review and retention of online marketing. According to Todd Estabrook, Commonwealth’s chief marketing officer, advisors will bear no additional cost.
“We’re first and free,” Estabrook says. “We recognized the importance of social media to advisors from the beginning. We wanted them to partake of the social part of social media; it was just a question of getting it done within the confines of FINRA regulatory guidance.”
Commonwealth will offer a weekly selection of pre-approved Facebook status updates, tweets and blog posts to complement advisors’ social media efforts. How-to guides on establishing a social media presence, best practices and compliance guidelines for ongoing use, and a moderated forum to exchange ideas and consult with marketing experts at Commonwealth’s home office will also be made available.
Erado Message Control is a preferred vendor for LPL Financial and a number of other independent broker-dealers, says Craig Brauff, the 17-year-old company’s CEO. While declining to be specific due to non-disclosure and privacy issues, Brauff did say there will be a flurry of announcements similar to Commonwealth’s in the next 30 to 45 days involving roughly 25 of the top independent broker-dealers.
“We identified the need about two and a half years ago,” Brauff says, when asked about how he identified the broker-dealer regulatory niche in social media. “At its roots, social media is an electronic conversation and subject to FINRA regulation from a compliance standpoint. Not only that, but social media postings have to be captured and retained for discovery purposes from a legal standpoint.”
Erado, he says, captures and retains data and then delivers it back to the broker-dealers existing compliance and archiving platform.
“There is no additional cost associated with training existing personnel to handle this kind of compliance,” he adds. “So it’s a lower cost of ownership for the firm. Also, no additional hardware and software is needed, which again adds to that lower cost of ownership.”
Commonwealth chose Erado over other vendors because only profiles with a single log-in that are subjected to FINRA regulation are tracked, versus tracking an entire machine.