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On Social Media, Cut Through the Compliance Clutter and Connect

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A webinar conducted on Thursday by Hootsuite, the social media dashboard service, covered challenges faced by firms in regulated industries like financial services when they use social media to connect with customers and clients.

In addition to complying with the regulations imposed by regulating bodies in their industry, firms must also find a way to link their social media strategy with their larger business objectives, according to Jonathon Reedy, a senior manager at Hootsuite.

Firms must also find a way to turn the social data they collect into action. “Data alone is useless,” Reedy said. “When you can couple your data with tools that provide real insight and are useful not just to the business but the client base as a whole, it lays the framework for strong client relationships.”

Educating employees on social media is a “resource intensive” challenge, Reedy said, and an important part of any internal policy. “It’s top of mind for all marketing executives and compliance executives, as a top priority for avoiding catastrophe in social: making sure the teams are well educated, making sure they understand the policy, making sure they understand the social landscape and the repercussions of their actions.”

Collaboration between teams in a firm is becoming more common, Reedy said. He said Hootsuite clients are taking social tasks “enterprise-wide.” That means, according to Reedy, that they’re “enabling the organization to share tasks globally. They’re bringing in external social information into internal tools. The result is that their teams are better able to work together. They have more access to critical information immediately.”

Reedy said that regulated markets tend to be slow to adopt new technology, choosing to wait for regulatory guidelines and action from other participants to “move in a herd.” However, he said, “I think we’re over that hump now. Almost all of the Fortune 1,000 firms have at least some social presence. Many of them have adopted an organization-wide social practice.”

A similar pattern happened when firms started adopting email in the early 1990s, he said, where some firms were wary or unsure of how to use it. Obviously that’s changed, and Reedy said the same movement is happening with social media, and will likely happen even faster.

One of the biggest growth areas for companywide social media is in selling, he said. Social provides firms with a way to find customers who need their product, and allows them to tailor their communication to their prospects, Reedy said.

Reedy suggested that in developing a compliance strategy for social media use, firms take a top-down approach and start by educating C-level executives on how and when to use it.

Nick Hayes, an analyst with Forrester Research, said that firms’ biggest concerns when it comes to using social media were legal and regulatory risk (89%), followed by risks to their brand (81%). He said that not owning the infrastructure of the channels social posts are going out on exacerbates those concerns for many firms.

Ambiguity is still a concern, he said. It feels like social media has been around for a long time, but some laws and regulations have been around for decades, if not centuries, he said. “It shows how long it takes these bodies to adopt and figure out how to apply mandates to this new channel.”

One difficulty for firms in regulated industries is that social media isn’t just one channel, Hayes said, which requires firms to sometimes “set particular guidelines in all these different places.”

He highlighted five distinct categories for social media compliance:

  • Data protection and privacy. A Forrester survey found 92% of consumers “take issue” with companies accessing the public part of their social media profiles. Hayes noted that doesn’t necessarily mean they’re against it entirely, but they’re “uneasy” about how that information is being used.
  • Employee rights. Hayes described one organization’s struggle with an employee who left the firm, taking the 17,000 or so followers he had built up while he managed the corporate Twitter channel.
  • Disclosure and third-party endorsement. Sometimes, firms need to be careful about how other users interact with their brand online. For example, Hayes said, if a third party suggests a use for a firm’s product that hasn’t been approved by the Food and Drug Administration, and the firm doesn’t address the unintended use, “the longer you leave it there, the more likely it is that you are condoning that comment as accurate.”
  • Governance and oversight. Process and controls, and training for the people using social media, are important parts of a social media policy.
  • Archiving and retention. “How are you going to provide context to the dialogue that comes up?” Hayes asked.

Hayes offered some recommendations to help firms meet those challenges.

First, he said, the internal and external social media environment at the firm needs to be monitored constantly. “This is really important because there are so many different ways it’s being used. You need to start thinking about what your organization is using, how your workers are using it, where you need to apply the policy, and doing so on an ongoing basis because it’s something that’s continually changing.”

Of course, firms also need a clear understanding of what their obligations are regarding their specific industry, “not just what they are today, but how they’re going to evolve in the near future,” Hayes said. He predicted that although there haven’t been cases with huge fines for noncompliance with social media regulations, that won’t be the case for long. “There are going to be examples of more heavily penalized organizations for not updating their policies, for having inconsistent approaches to how they manage social media.

Finally, Hayes urged advisors not to lose sight of why they’re using social media in the first place — to connect with their clients. “At the end of the day, social media is going to help you create better, deeper relationships,” he said.

John Hair, director of risk consulting at KPMG, an audit, tax and advisory firm, said that firms aren’t trying to demonstrate their social media compliance to their customers. “The marketplace doesn’t really care that much,” he said. On a day-to-day basis, they’re not really demonstrating their compliance to regulators either because “the last thing we want to do is have the regulators come in talking to us about our compliance programs if we fail.”

The real target audience for a firm’s social media compliance strategy are the executives who are setting the budget for social media. “That space where the executive suite and our social teams meet is where we believe governance lives,” he said.

Everything on social media is discoverable in the event of a lawsuit, he said, so it’s important that firms not post anything that could damage the industry’s viewpoint of the firm.

“Compliance is not just there to spoil the fun,” he said. “Compliance frameworks really drive an industry to run as efficiently and effectively as it can while protecting the customers it serves.”

—Check out Hearsay Social Wants to Help Advisors Predict Client Behavior on ThinkAdvisor.

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