The U.S. Securities and Exchange Commission recently unleashed financial professionals from its old-fashioned social media restrictions in a move that stands to be extremely beneficial for advisors’ and investors’ wallets — considering the state of financial literacy in this country and the roughly 229,000 people who are currently employed as financial planners, according to the U.S. Bureau of Labor Statistics.
It took the financial industry a long time to make sense of social media. In 2013 — nine years after Yelp was founded and Mark Zuckerberg started Facebook — the SEC officially gave publicly traded companies permission to disseminate company information via social media. That was progress.
The real change came in last March when the SEC updated its guidance regarding the way in which financial advisors interact with customer reviews. For the longest time, they were barred from getting anywhere close to reviews – whether that meant encouraging customers to rate their services or featuring reviews in advertising materials. Then came this:
“We understand that use of social media has increased the demand by consumers for independent, third-party commentary or review of any manner of service providers, including investment advisers,” the SEC wrote in announcing its updated guidance. “We recognize that social media has facilitated consumers’ ability to research and conduct their own due diligence on current or prospective service providers.”
Financial advisors can now interact with reviews as much as they want, as long as they don’t pick and choose which ones to feature. That’s an extremely important development on a number of levels.
For starters, financial advisory is undergoing significant growth, according to the Bureau of Labor Statistics – with the number of such jobs projected to increase by 32% from 2010 to 2020, ultimately surpassing 273,000.