AdvisorAssist's Guide to Confident and Compliant Social Media for Advisors

Confident and Compliant Social Media for Advisors

© Copyright 2013 AdvisorAssist LLC

February, 2013

2

Social Media for Advisors

Many advisors are jumping into social media to communicate with clients, generate new business and even service clients. However, many Advisors are oFen confused on how to proceed. We’ll dig into important topics on how to uIlize social media in a compliant and strategic manner.


3

What is considered social media?


4

How are advisors using social media?

PromoIng their website DemonstraIng knowledge and experIse Learning and knowledge sharing CommunicaIng with clients And some have even started to service clients through social networks.


5

ARendee Poll (Social Media Webinar, February 2013)


6

Opportunity to engage clients and prospects more broadly than ever before The new “word of mouth”—your brand and message can reach prospecIve clients indirectly More opportuniIes to “humanize” your firm MarkeIng no longer limited to markeIng staff. All employees can (and maybe already do) influence how your firm is perceived Engagement is now a “two way street.” Clients, prospects and compeItors can engage your firm in two-‐way dialogues. Easier for audience to probe deeper into your message, making clarity and consistency even more important

Social Media’s Impact on MarkeIng

Basic Tenants Remain Unchanged

IdenIfy and target potenIal clients with unmet needs that fit your experIse and strategic objecIves Clear communicaIon of your unique value proposiIon Importance of differenIaIon in compeIIve markets IdenIfy methods and tacIcs to effecIvely communicate your “message” to clients and prospects Content and delivery must meet compliance and regulatory standards Strategic approach important to add deliberateness and consistency

New Tenants Created by Social Media


7

Social media will not make you a beRer marketer. In fact, because of the ease and speed of social media, it’s just as likely to make you a worse one. Engage with purpose. Define your message, posi>oning and brand first. Then, make sure that all of your SM ac>vity is geared towards delivering your message, establishing your posi>oning and reinforcing your brand. Share and listen. (Don’t sell.) If you come across as a commercial, you will turn off your audience quickly. SM engagement is not about selling. In fact, it challenges many legacy sales techniques that are no longer effec>ve. Content is your friend. Create it, share it, comment on it. Going forward, content marke>ng is how advisors will create awareness, establish credibility and earn trust, long before the first mee>ng with a prospect.

The Tenants of Social Media for the Strategic Marketer


8

Recent Regulatory Hot Spots IARs vs. Registered RepresentaIves Segment your Networks The “AdverIsing Rule” Third-‐party Content Recordkeeping and Archiving

Topics on Social Media Compliance


An Early Look at a Regulator's Take on Social Media

© Copyright 2012 AdvisorAssist, LLC

"The Adviser has failed to provide sufficient and appropriate training to employees, to include its investment adviser representa:ves (IARs) pertaining to LinkedIn and Facebook." "There is no evidence that the Adviser requires or documents prior approval of content.” "Regarding the monitoring of the firms’ Facebook and LinkedIn sites. The Adviser should consider how frequently to monitor third-‐party archiving sites. The Adviser should take into account that many third-‐party sites may not provide the level of access needed by supervisors or compliance personnel". "The Adviser has failed to address in wri:ng, procedures for reviewing the adviser’s fiduciary du:es in seJng social website content standards, par:cularly for content that contains investment recommenda:ons, specifically the investment performance noted via Facebook". "The Adviser has failed to address, in wri:ng, parameters and training for prohibi:ng specific content or imposing other content restric:ons for its investment adviser representa:ves to follow". "Our staff asks the Adviser to please provide an explana:on as to why it does not consider a "like" via the social networking site Facebook to be considered a tes:monial. If such explana:on cannot be provided, the Adviser shall be required to remove this func:onality prior to further use".

Source: Thomson Reuters, May 29, 2012

The following is a list of deficiencies cited by a state securiIes regulator aFer performing a review of an advisor. This parIcular advisor was acIve on Facebook and LinkedIn and had contracted with a third-‐party vendor to monitor and archive their social media acIvity.

10

What is an AdverIsement under Rule 206(4)-‐1?

•  LinkedIn o  Your personal profile o  Your business profile o  Your status updates o  Group affiliaIons and discussions o  Content submissions (i.e., news arIcles) o  Messages to > than 1 person o  AdverIsements

•  TwiRer o  Your personal profile o  Your business profile o  Tweets and ReTweets o  Lists o  Private Tweets

•  Facebook o  Your personal profile o  Your business profile o  Your status updates o  Your wall o  Content submissions (i.e., news arIcles) o  Messages to > than 1 person o  AdverIsements


11

•  FINRA released guidance again in June 2012 to further refine that Registered Reps may parIcipate in social media without pre-‐approval of an individual post. (Regulatory NoIce 12-‐29)

•  Pre-‐Approval by the B-‐D depends on internal policies

•  Formal archiving process and technology soluIon

•  Principal review of the use of Social Media

•  Adherence to 17a-‐4 and FINRA Books and Records requirements

Use of Social Media – Registered RepresentaIves


12

•  Rule 206(4)-‐1 – “AdverIsing Rule”

•  No TesImonials

•  Any communicaIon to more than one person is an adverIsement!

•  No formal system requirements for archiving but regulators expect to see this in place

•  No pre-‐approval for any posts, unless firm policy

Use of Social Media – IARs


13

What is your biggest risk or concern? Hint: It should not be the SEC, the States or FINRA…

Segment your networks!


14

…It is your buddy from high school! If you don’t want to review an embarrassing moment with clients, segment your networks!

Segment your networks!


15

Any communicaIon to more than one person (or is used more than once) is an adverIsement. •  This includes materials designed to maintain exisIng clients or solicit new

clients AdverIsing must be:

•  Truthful and accurate •  Reviewed and monitored •  Archived

The “AdverIsing Rule”


16

An old favorite sIll applies: No TesImonials •  "TesImonial" is not a defined term but has been interpreted to mean a

statement of a client's experience with, or endorsement of, an investment adviser.

Don’t use “graphs”, “charts” or “formulas” without context.

•  RegulaIons prohibit the use of any “graph, chart, formula or other device that suggests that it can in and of itself be used to make trading decisions without prominently disclosing any limitaIons or difficulIes in use”

•  Think about how materials are implemented with your clients and don’t imply that any one tool or technique can stand in isolaIon

Don't adverIse specific past recommendaIons.

Pre-‐approval not required for IARs unless firm policy states otherwise.

The “AdverIsing Rule”


17

Third-‐party content that is posted on your social media sites may include messages, forward links or arIcles

Check with your CCO to determine if your firm's policy allows for third-‐party posIngs •  Some firms limit third-‐party use to "one way posIngs", where IARs

post on the firm's social media sites but do not interact with or respond to third-‐parIes

•  Some firms limit third-‐party posIngs to authorized users only and/or prohibit posts from general public

Third-‐party Content


18

Don't communicate private info over open networks If you are both an IAR as well as a Registered RepresentaIve of a broker-‐dealer, your acIviIes are subject to both SEC and FINRA rules and you are expected to follow the stricter of the two.

•  FINRA-‐specific rules are outside of the scope of this presentaIon but can be found in an addiIonal OAC module.

When in doubt? Ask •  We train CCOs to be open to this powerful medium and open to new

ways to develop new business and serve clients using social media •  Don’t rely on the “I saw someone else doing it” test…

Some AddiIonal Items to Remember


19

CCOs are obligated to maintain records of any social media acIvity that may be deemed a "required record” for five years following the last year it was used. Rather than making this determinaIon on a case by case basis, most RIAs have adopted an overarching policy of archiving all social media communicaIons. IARs and RRs may not alter any sevngs within social media sites that may interfere or preclude your firm from archiving communicaIons. IARs and RRs may not destroy or alter any communicaIons aFer they have been posted on a social media site (i.e. an aRempt to alter archives)

Recordkeeping and Archiving


20

Social media is an incredibly powerful medium to efficiently: •  Build brand awareness •  Demonstrate knowledge and experIse among your

audience •  Communicate with prospecIve clients •  Deepen relaIonships with and serve your exisIng clients

Embrace Social Media with Confidence


Business

AdvisorAssist's Guide to Confident and Compliant Social Media for Advisors