Learn About FINRA and Social Media Compliance Rules
In January 2010, the Financial Industry Regulatory Authority (FINRA) provided financial industry professionals with guidelines to govern their social media interactions with the general public.
Providing its registered members with guidelines about how to communicate financial information online is nothing new for FINRA; as early as 1999, the regulatory body began dictating how members should communicate within Internet chat rooms.
In FINRA’s eyes, its new social media guidelines are an extension of their previous Internet communication advice.
It is a great way to connect with new clients and continue to develop relationships with them (high net worth prospects, for example). However, those who work in the finance industry may be a bit hesitant to get started. That is because of a set of rules published by the Financial Industry Regulatory Authority–known as FINRA.
Plus, add a little bit of “social media usage confusion”, and it’s enough to stop anybody in their tracks.
These rules are put into place to protect consumers and businesses in the industry. Unfortunately, these regulations can make it hard for financial planning services companies to begin developing a social media presence. These tips will help you when you get started with social media. It is a way to reach out to your prospects and continue to build trust with existing clients.
1. Establish a social media policy
You need to make certain every involved employee (including you!) understands exactly what the social media platforms are used for and how to stay within the guidelines of FINRA. Additionally, go over your policy regularly. Since social media is rapidly changing, you may need to make changes on a regular basis.
2. Inspect social media rules and keep documents current
FINRA requires that each a firm’s written communication is subject to routine inspection (FINRA official). Because of this, it is vitally important that you keep documentation of how social media is being used as well as a listing of URLs of all accounts. There are further requirements; looking further into this section of the regulations can help you better understand what records must be kept.
3. Testimonials are off-limits, but…
It is important that you not make recommendations or suggestions for clients on social media platforms. And, clients cannot boast about your company, and share pages. Because of this, it may be best to use a “soft-sell” approach to social media. A chatty and personal approach that only mentions your services in passing both makes your business approachable and helps avoid making a mistake with regulations. And, when you add education and information marketing to the mix (without the sales hype) it will help to build your reputation. Over time, you’ll attract higher quality clients and more of them if done right.
As a business in the financial sector, you cannot be too careful when working with social media. However, it is an important way to connect with your customers and the “next frontier” of marketing.
Therefore learning how to utilize it without overstepping the regulations put into place by FINRA is vital. The biggest piece of advice is to start slowly and always be vigilant. If you are careful, your social media profiles can be a very positive addition to your company’s online presence. And, you should follow the ‘regular’ online marketing principles of research, analysis and content updates. That includes learning from top wealth management advisors.
In summary
Subjects you need to consider when using social media for your financial services business are:
SEC and FINRA rulings and regulations
Social media marketing strategies for FSI (these must be planned, and built out over time)
