The Good News/Bad News of FINRA’s Social Media Guidelines Release

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FINRA release its first official guidance on blogs and social networking sites in a 10 page report on January 25th, 2010.  Let’s start with the good news.  FINRA is very much understanding the online communication movement as evidenced in the statistics about Americans increasingly participating in social networks for both business and personal communications.  In fact, in the report FINRA cites a statistic by the Pew and American Life Project that 46% of American adults who used the internet in 2009 logged into a social networking site, which was up from 8% in 2005.  The merging of social relationships and technology is upon us and FINRA seems willing to allow financial advisors to participate in this new media realm, with a few caveats.

Here is a brief overview regarding FINRA’s suggested guidelines:

  • Recordkeeping – Firms must be able to ensure that they can attain records of both “interactive” and “static” online communications.  Although the technology does exist for this, it is up to each firm to determine how and what system they will adopt to satisfy this requirement.  Currently there are even services that individual financial advisors can adopt on their own that enable archiving and reporting on most social networking and blogging activity (www.arkovi.com and www.smarsh.com)

Good News:  You are accustomed to being supervised, and there are inexpensive, effective programs available to record and archive all of your online activity

  • Suitability – The bottom line here is do not make specific recommendations in any of your communications.  You should keep your comments, posts, and interactions general in nature if you are referring to anything that is financially related.

Good NewsYou are most likely already accustomed to this requirement so it should not surprise you

  • Interactive Electronic Forums – Participation in an interactive electronic forum does NOT require pre-approval, but is still subject to supervision (similar to the way your email is supervised and archived; see ‘Recordkeeping’).  Interactive electronic forums include Facebook, Twitter and Linked In, but these sites also have “static” content.  Any “static” content has to be pre-approved.  This would include the information sections and descriptions about you.  What is still unclear is whether or not blog “posts” are considered static (requiring pre-approval) or interactive (would only be subject to supervision).  The guidelines speak to both.  Blogs are generally dynamic and interactive in nature where as traditional websites are considered to be static, but most firms will probably require that blog posts be pre-approved before being published.

Good News:  You can participate in social networks without pre-approval and you can have a blog with a business slant as long as your activity is being archived and supervised

  • 3rd Party Posts - This section of the guidelines pertains to the posting of third party content on a site established by the firm or its personnel.  FINRA as a general matter suggests that these do not require prior approval unless the firm is involved in the preparation of the content or explicitly or implicitly endorsed or approved the content.  FINRA suggests that firms adopt a policy for proper usage guidelines for customers and other third parties that are permitted to post on firm-sponsored web sites.

Good News:  It appears that these types of posts will be allowed but firms should establish clear guidelines and use a disclaimer to inform customers that third-party posts do not
reflect the views of the firm and have not been reviewed by the firm for accuracy.

As you can see, FINRA is opening the door to allowing registered representatives to participate in social media and blogging, and this presents a tremendous opportunity for you as a financial advisor to build your online personal brand and join the conversation.  What is the bad news?  Now that FINRA is allowing you to take part, they are placing the onus on individual firms to determine how they want to establish their internal policies for record keeping and supervision.  Some firms will allow their advisors more freedom than others and some will move more quickly than others.  FINRA has only provided some general guidelines in this initial report but overall the rulings seem to be positive.  More guidance will be provided in an upcoming webinar on February 3rd.  You can register for the webinar here. (there is a fee to participate)

In the meantime, what can you do now and how can you get started in building your online personal brand within these newly issued guidelines?  I recommend that you develop a thoughtful, strategic plan and sit down with your compliance manager to review a process for how you will obtain pre-approvals and keep records of your online activity.  Eventually, formal guidelines will be rolled out by your firm.  However, it is important to start now!   Your online personal brand is an asset that will accumulate value over time.  Focus on your personal interests and hobbies in order to find ways to connect to members of your natural niche markets.  The sooner you claim and develop your digital footprint, the sooner it can start paying dividends for you.  Working with your compliance team and adhering to best practices may be the best opportunity for beginning your journey now into social media.  Waiting for formal guidelines may cost you valuable opportunities to grow your business.

Additional commentary from the legal community regarding FINRA’s Social Media Guidelines:

Socialware’s FINRA Social Media Companion Guide

SEC Law Blog

ARS Technica

Social Networking Law Blog

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About Stephanie Sammons

Stephanie Sammons is the founder and CEO of Wired Advisor™. She's been named one of the Top 25 Social Media Experts You Need to Know by LinkedIn and a Top Financial Industry Blogger by RIABiz. As a CFP® and former 15-year financial advisor, Stephanie combines her "in the trenches" industry knowledge with her extensive digital marketing experience to teach financial advisors how to win and keep clients in a wired world. Follow Stephanie on Twitter and Google+.

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5 Responses to The Good News/Bad News of FINRA’s Social Media Guidelines Release

  1. SEO Guide February 19, 2010 at 1:20 pm #

    Hi nice site you should add your article on Shout Space

  2. Pavelu Bento February 19, 2010 at 7:22 pm #

    Thanks for publishing about this. There’s a lot of important tech info on the internet. You’ve got a lot of that info here on your website. I’m impressed – I try to keep a couple blogs somewhat on-going, but it’s a struggle sometimes. You’ve done a solid job with this one. How do you do it?

  3. ProspectMatch May 5, 2011 at 9:06 pm #

    It does not much matter what FINRA says because the FIRM will have more restrictions. the last thing they want to do is supervise a few thousand FA blogs. FINRA guidelines become the MINIMUM hurdle and then reps need to comply with the arbitrary hurdles set up by each firm.

    • Stephanie Sammons May 5, 2011 at 11:27 pm #

      True. Each firm will interpret as they see fit. Many are allowing blogs just as they allowed websites, but some will require pre-reviewed or ghost-written content which will limit the success of utilizing blogging as a strategy to build authority in your niche markets. Thanks for your comment!

Trackbacks/Pingbacks

  1. Susan Weiner's Blog on Investment Writing – FINRA/SEC compliance guidance for bloggers - July 15, 2010

    [...] “The bottom line here is do not make specific recommendations in any of your communications.  You should keep your comments, posts, and interactions general in nature if you are referring to anything that is financially related,” says Stephanie Sammons, CEO of Wired Advisor, in “The Good News/Bad News of FINRA’s Social Media Guidelines Release.” [...]

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