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As broker-dealers consider letting registered representatives use social media for business purposes, a well-developed compliance program in this area is essential. Whether the media is something like a blog, Facebook, Linkedin, Twitter, or something else, firms must remember that they have an obligation to reasonably supervise its use. This means that the firm must develop written procedures that include details for how social media may be used and by whom (and maybe what specific tools or platforms can be used), for what use approvals are needed, how and when approvals will be granted, and how the firm will continually supervise to enforce its procedures, among other things.
Importantly, firms must also have in place systems to archive and store copies of the media used.
Further, they must be careful to make sure that no recommendations to invest in a particular product are made, as it would be very difficult to ensure that the recommendation was suitable for each person receiving it. Firms must also consider whether the information being posted or shared is considered advertising that requires regulatory approval. Finally, firms must enforce its procedures in this area, and document that it is following its procedures.
Even though social media use might require resources to develop and implement procedures, and then to supervise its use, firms may determine that the benefits exceed the costs. Done right, social media can help educate your client base, help build brand awareness, and help a broker and firm keep top of mind awareness with prospects. As your firm develops its social media strategy, don’t forget the importance of needed written procedures and controls, and the need to implement and document compliance with those procedures.
I completely agree with you Joel, especially where you say “Even though social media use might require resources to develop and implement procedures, and then to supervise its use, firms may determine that the benefits exceed the costs.”
Too often organizations are quick to dismiss new ideas or adopt tools for fear of what could go wrong, instead of focusing on what could go right. Given the choppy waters the financial services industry has recently navigated, social media could be a step in the right direction of re-building trust and transparency in this industry.
I would never suggest that social media replace or substitute the relationship between advisor and client, However I would advocate that it use could enhance the relationship and allow the advisor an opportunity to extend beyond their immediate client base. In the end, our industry is one of relationships that is built on trust and grows on loyalty. And ROR (Return on Retention) can be just as important as a ROI (Return on Investment).
Thanks!
Victor Gaxiola
@victorgaxiola
Archiving Social Media to comply with FINRA is only the first step.
When updating records retention strategies, companies should carefully consider the requirements for digital evidence in court, to ensure that their electronic files will be admissible in e-discovery or litigation cases. The Federal Rules of Evidence require a digital timestamp and digital signature to prove the authenticity and integrity of electronic files presented in court.
Companies should also ensure that their social media pages are preserved in their native format, with the ability to “re-play” as if they were live. This should include video, links, Flash, and other features because simple screenshots are not accepted in regulatory situations. You must be able to prove the exact content of your social media pages from any given date.
Read more here:
http://pagefreezer-websitearchiving.com/finance/