Financial Advisors Are Subject to Federal Regulations on Social Media, Too. Here’s How to Stay Compliant.

by | Sep 8, 2020

As financial advisors well know, social media governance does not stop at banks and insurance companies. Financial advisors, including registered investment advisors and broker-dealers, are also held to stringent guidelines from regulatory bodies.

Advisors have to be careful when using social platforms to grow their networks, source new customers, and build their reputations — or they could face steep fines or other penalties. Unfortunately, this means many have sworn off social media as part of their practice entirely.

But compliant social media strategies are possible, and they’re worth the effort: In a 2018 survey, 86% of advisors who use social media reported that it helped them gain clients, and 54% said it helped them have better professional relationships with clients.

With these strategies, you can lower your risk of noncompliance and make the most of your social selling strategy:

1. Start off right.

Whether you’re just starting out on social media or you’re looking to revamp your strategy, it’s important to set up your profile in accordance with SEC guidelines. For example, understand what kinds of client commentary you can and cannot include in your “About” page or share on your account.

What’s more, many institutions have strict policies around email addresses tied to social media accounts, so make sure you know what your bank or firm requires. Using a work email instead of a personal one for your professional social account will keep the lines between personal and professional communication very clear cut, which is essential in any advisor’s strategy.

2. Stay up to date on policies and training.

Financial institutions are required to carry out social media risk assessments and update social media policies periodically. Your bank or firm should offer training to help you understand and carry out these policies. If you haven’t heard an update in a while, it’s worth it to ask whether any policies have changed. Staying informed about guidelines from both regulatory bodies and your institution can help you share and engage on social media without worry.

3. Remember to archive.

If FINRA ever calls upon you to prove compliance, the institution will need to provide a full archive of all social media and online communications. That means you need to save every business-related post, comment, and response. That might sound like a lot to handle, but the right social media management software can make it easy. Auto-archiving features can capture and save all posts and engagement, compiling them into an easily searchable database.

4. Streamline the approval process.

FINRA dictates that financial advisory firms set up review and approval processes for social media posts. To make sure the approval workflow doesn’t create unnecessary bottlenecks, look to your marketing department and compliance officers to establish roles and responsibilities.

For example, is your marketing department originating posts, sending them to advisors for approval, and then getting the compliance stamp of approval? Or are advisors creating their own content? Whatever the process, keeping it clear will ensure nothing falls through the cracks. Keeping all versions in one centralized location with social media management software can streamline the process even further — potentially freeing up 20%-30% of your time during the workday.

Social media does require some investment in the form of time and education to keep things compliant, but the return is worth it. If you stay up to date on policies and regulations, keep track of all electronic communication, and follow a consistent approval process, then you can lower your regulatory risks and move forward confidently on social media to build your network and grow your business.