5 things all financial advisors should know about compliance
February 6, 2013 by Amy McIlwain
Compliance has been and continues to be a pressing topic when it comes to
financial advisor social media. While advisors are becoming more comfortable
with social media and acquainted with compliance regulations, it is something
that must be thoroughly understood and re-visited on a regular basis. If you are
a rookie in social media compliance, here are five things that will give you a
solid base of knowledge.
1. Static content
Static content
is fixed content like website copy, social network profiles, and social network background images.
FINRA considers this content to be “advertisements.” This content must be
pre-approved and any changes/updates must be documented. If you are unsure if
the content is considered static, ask yourself: Is commenting or communication
possible? If the answer is no, it’s static.
2. Interactive
content
Interactive content is content that changes. It consists of
content where individuals can communicate and participate in conversations; for
example, Facebook posts, tweets, instant messaging and blog posts. This type of content
doesn’t need approval, but must be monitored on a frequent basis to ensure it
doesn’t violate the content requirements of FINRA’s communication rules. Similar
to static content, interactive content must be archived and recorded, but it
doesn’t have to be pre-approved.
3. Archiving
According
to FINRA, firms must archive all interactive content related to their business.
NASD rules 2210 and 2211 also state that firms must retain all communications
for a period of three years from the date of last use. While interactive content
need not be pre-approved, it’s still a great idea to have some form of internal
approval process/social media policy to ensure all postings align with your
company’s vision and mission. If you are in the market for a strong social media
archiving software, check out “The financial advisor’s quick guide to social media archiving.”
4. Recommendations
The rules about recommendations on
social media require common sense. In essence, it is not appropriate to
recommend a product to your entire network via a post to a social network. It
may be appropriate to recommend a product to an individual with whom you have
been communicating in a private conversation on a social network, but if the
conversation becomes that serious, I recommend scheduling a personal
consultation/meeting. Remember, social media is not about offering financial
recommendations to people; it’s about lead generation and positioning yourself
as an expert.
5. Third-party content
Third-party content
consists of posts, comments, etc. that are not authored or approved by your
company. While you won’t necessarily be reprimanded for this content, it’s still
your responsibility to ensure it gets archived and recorded. Again, while it’s
not required to approve all of this content, I recommend that you closely
monitor and have some sort of internal approval process for third party posts.
