Operations Professionals and Social Media: Compliance Hurdles and Business Value for Financial Firms

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Operations Professionals and Social Media: Compliance Hurdles and Business Value for Financial Firms

  1. 1. Operations Professionals and Social Media Compliance Hurdles and Business Value for Financial Firms<br />Clara Shih (Moderator/Presenter) Bestselling Author of "The Facebook Era”<br />CEO and Founder of Hearsay Social    Dr. Robert Ellis (Panelist)Co-Founder of TwoSorts.com  <br />Former SVP, Technology Innovation Portfolio Management Group at Bank of America   Alexandra Basak Russell, Esq. (Panelist)Compliance Manager at Hearsay Social  <br />SIFMA Annual Operations Conference and Exhibit 2011<br />
  2. 2. Agenda<br />Introduction<br />Business value of social media for financial firms<br />Regulatory challenges<br />Putting social media into practice<br />Q&A panel discussion<br />
  3. 3. We live in a Social Era<br />facebook<br />500M users<br />twitter<br />200M users<br />linkedin<br />100M<br />2004 2005 2006 2007 2008 2009 2010 <br />
  4. 4. Technology eras of our lifetime<br />Social<br />2011<br />Internet<br />1990s<br />PC<br />1980s<br />Mainframe<br />1970s<br />
  5. 5. 2009: Social networking surpasses email<br />
  6. 6. 2010: The year of social media strategy<br />73.5% of US companies consider social media a top priority <br />—Survey of Chief Marketing Officers<br />Source: Forrester Research<br />
  7. 7. 2011: The year of social media execution<br />Source: Burson-Marsteller Communications Group, 2011<br />
  8. 8. Your colleagues and your firm’s clients are on social media. Are you?<br />9 10<br />out of <br />of your customers are active on social media<br />23<br />out of every<br />financial professionals are on<br />at least one social network<br />
  9. 9. Agenda<br />Introduction<br />Business value of social media for financial firms<br />Regulatory challenges<br />Putting social media into practice<br />Q&A panel discussion<br />
  10. 10. Business value and use cases on social media<br />
  11. 11. Client-facing roles and social media<br />Investment advisers<br />VCs<br />Fund managers<br />Commercial bankers<br />Asset managers<br />Investment bankers<br />Loan officers<br />Life insurance agents<br />Money managers<br /><ul><li>Client engagement
  12. 12. Relationship-building
  13. 13. Referrals
  14. 14. Staying top of mind
  15. 15. Personal branding as being tech savvy</li></li></ul><li>But first, firms need to address new challenges introduced by social media<br />Every employee now has a public voice<br />Inter-department cooperation <br />Loss of visibility and control<br />Rogue pages<br />IT<br />Budget<br />Brand misuse or misrepresentation<br />Stale pages/profiles<br />Establishing metrics to <br />gauge success<br />Lost productivity<br />Staffing <br />
  16. 16. Operations Professionals and Social Media:Compliance Hurdles and Business Value for Financial Firms<br />Alexandra Basak Russell, Esq. <br />Compliance Manager at Hearsay Social  <br />
  17. 17. Agenda<br />Introduction<br />Business value of social media for financial firms<br />Regulatory challenges<br />Putting social media into practice<br />Q&A panel discussion<br />
  18. 18. And new regulatory challenges…<br />Creating and implementing a plan “reasonably designed to monitor” employee communication with the public<br />Complaint handling procedures<br />Record retention and<br />archiving<br />Regulation S-P<br />Principal pre-approval of static communications<br />Suitability concerns for investment products<br />Testimonials and endorsements (Antifraud)<br />Regulation F-D<br />
  19. 19. FINRA Regulatory Notice 10-06<br />Not binding or actionable<br />See also Guide to the Internet for Registered Representatives<br />
  20. 20. Broker-dealer social media use is regulated as:<br /><ul><li>“Communications with the public”
  21. 21. 5 categories
  22. 22. Advertisements (Static communications)
  23. 23. Sales literature (Email to 25+ prospective retail customers)
  24. 24. Correspondence (IM)
  25. 25. Institutional sales material (Broker-to-broker messaging)
  26. 26. Public appearance (Chat rooms)</li></li></ul><li>Why you should care:<br />“The proposal would expand FINRA’s registration requirements to include as qualified and registered persons certain individuals who are engaged in, or supervising, activities relating to sales and trading support and the handling of customer assets to enhance the regulatory structure surrounding a member firm’s back office operations … Importantly, those persons subject to the new Operations Professional registration category would be … subject to all FINRA rules applicable to associated persons and/or registered persons.”<br />
  27. 27.
  28. 28. FINRA regulations governing the use of social media<br />
  29. 29. SEC regulations related to the use of social media<br />
  30. 30. Takeaways<br />Guidance about certain platforms, applications, and features are constantly evolving<br />Use principles of fairness, discretion, and accuracy<br />Keep it general (think suitability)<br />Don’t report on product or market performance<br />Testimonials present added challenges for certain financial professionals (Investment Adviser’s Act of 1940)<br />
  31. 31. Operations Professionals and Social Media:Compliance Hurdles and Business Value for Financial Firms<br />Dr. Robert Ellis <br />Co-Founder of TwoSorts.com  <br />Former SVP, Technology Innovation<br /> Portfolio Management Group at Bank of America<br />
  32. 32. Agenda<br />Introduction<br />Business value of social media <br />Regulation of social media<br />Putting social media into practice<br />Q&A panel discussion<br />
  33. 33. It’s a journey we’ve done before<br />Think as well of communication eras<br />Telephone <br />Fax <br />Email<br />IM<br />And in other areaslike systems management<br />Learn from the past – adapt to the new channel<br />
  34. 34. Learn from doing email & IM<br />It’s a whole company problem to solve<br />Don’t sell an idea and an ask at the same time<br />Test and Learn - tools, controls, policy<br />Fit social rather than make it fit you<br />Make social part of your product development<br />Listen, Engage, Learn, Promote<br />
  35. 35. Challenges<br />Identity – verification and encapsulation<br />Authorization – from entitlements to use<br />Service Management – no such thing<br />Social sites – for members not companies<br />Technology – they all work differently<br />Treat each site differently – from audience to implementation and onto business as usual<br />
  36. 36. Good news – challenges solved<br />Social enterprise integration is maturing<br />We can now listen very well<br />We can have a managed service interface<br />We can do pre and post review<br />We can do some triage<br />We don’t need direct social site access<br />Emerging capabilities: Single sign on, mobile convergence<br />
  37. 37. Agenda<br />Introduction to social media for business<br />Business value of social media for financial firms<br />Regulation of social media<br />Putting social media into practice<br />Q&A panel discussion<br />

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