The use of social media as a financial-services marketing strategy has come a long way.
Less than ten years ago, only a minority of advisors used platforms such as Facebook and LinkedIn to help promote their businesses. Even that was an uphill battle, with compliance departments and financial regulators placing roadblocks in their path.
Today, the majority of advisors use such technologies to engage with the public, promote themselves as thought leaders, and to identify experts and best practices that can help them operate more effectively.
The maturation of the social-media regulatory framework has played a large role in fostering this growth. Unlike in the early days, financial advisors now have bright lines to respect, as well as the technology tools to monitor, store, and assess their posts. This is a good thing, since the Securities and Exchange Commission has announced that, starting on Oct. 1, 2017, it will once again raise the social-media regulatory stakes for investment advisors.
The agency announced this move in August 2016 as part of a broader effort to modernize Form ADV disclosure requirements. It will now require more information on ADVs about separately managed accounts, clearer guidelines for umbrella registrations (for multiple investments advisors on one ADV), and various additional data points, including listing the social media platforms on which advisors have a presence and for which they control the content.
Here’s what this means in practice: Beginning next October, investment advisors must disclose all of their corporate-owned social media accounts (example: a Facebook business page) as well as individual accounts on which they publish business-related content.
The goal of broadening social media regulation: To give consumers more tools for evaluating the risk of doing business with an advisor. A laudable goal, for sure, but one that will force financial advisors to up their game when it comes to responsible, compliant use of social media.
Consider using technology that can aggregate social media posts with other forms of client communications. (Photo: iStock)
What to do from now until October 2017?