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Practice Management > Marketing and Communications > Social Media

New must-know SEC rules

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Last week, the SEC published new testimonial and social-media guidelines which clear the way for advisors to use social-media review sites such as Yelp and Angie’s List. While the new guidance may seem like a big leap forward for financial advisors who use social media, there are still many restrictions. It’s essential that you understand what you can and cannot do.

While I’m not a compliance expert, here is my understanding of the document. (I strongly recommend you consult your compliance officer or attorney prior to implementing any social-media campaign.)

1.     If you control the reviews, you can’t use them. If you have the ability to control the reviews on a site in any way, it is considered a testimonial and can’t be used. But sites that show all reviews—both positive and negative—and do not enable you to delete or hide reviews (i.e., Yelp) are now acceptable.

2.     If you show all reviews, you can promote it. The SEC guidance now allows you to publish reviews on your website, as long as all the reviews are published, not just a select few. If you decide to take advantage of this freedom, you should use a widget that automatically includes all the reviews. Otherwise, if there’s a gap between when a review is written on a social-media site and when you update your website, you could be in violation of the testimonial rule. The widget will not necessarily show all reviews but will take you to the site where all reviews are found, so check with your compliance officer prior to using such a tool.

3.     You can show your friends, fans and followers, as long as you don’t imply a recommendation. You are now able to show on your website pictures of those people who follow your social-media profiles. This won’t be considered a testimonial as long as you don’t do anything that would make people think that the people shown are clients who are recommending you and your services.

4.     You may be able to show ratings. It appears that you may advertise ratings of your business from these social-media sites, such as Yelp’s five-star ratings. Just like reviews, these ratings have to reflect both the positive and negative and cannot be under your control in any way.

Good news, but still lots of questions. This new guidance is good news for firms that already have negative reviews posted about them on third-party social-media sites such as Yelp. Previously, the general consensus was that you could not claim a Yelp profile, so if someone had written a negative review, there was nothing you could do about it. Now, you can claim your profile and customize it to fit your brand and messaging—and hopefully attract some positive reviews to counteract any negative ones. By creating profiles on third-party social-media review sites, you can proactively build a good reputation instead of scrambling to defend yourself against a negative review.

While this guidance may seem like good news, there are still some lingering questions that need to be answered:

1.     Are you able to solicit reviews from clients? It is clear you are not allowed to compensate anyone to write reviews (including people you supervise) and that you can’t write your own reviews. But it is not clear if you can solicit reviews from clients.

2.     Are you allowed to respond to negative reviews on these sites? The SEC guidance says, “The independent social media site, the investment adviser and the IAR may not provide subjective analysis of the commentary.” What exactly does this cover?

3.     Is a negative review considered a client complaint that needs to be addressed and/or reported to the regulatory bodies? The SEC doesn’t specifically address this.

4.     Do these review sites need to be archived? The answer is probably yes, but is your archiving service able to provide archiving for such sites?

Using a review site such as Yelp may seem like a good idea for some firms. For others, it might be too risky because of these unanswered questions. Think carefully before you jump on the Yelp or Angie’s List bandwagon and definitely consult your compliance officer or attorney before starting any new social-media marketing campaign.

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Kristen Luke is the principal of Wealth Management Marketing, a firm dedicated to providing marketing strategies and support for registered investment advisory firms. For more information, visit