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


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An overview of social media for RIA firms regulated by the SEC, state regulators and FINRA.

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

  1. 1. Confident  and  Compliant  Social  Media  for  Advisors   ©  Copyright  2013  AdvisorAssist  LLC     February,  2013  
  2. 2. 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.   ©  Copyright  2013  AdvisorAssist  LLC  
  3. 3. 3   What  is  considered  social  media?   ©  Copyright  2013  AdvisorAssist  LLC  
  4. 4. 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.   ©  Copyright  2013  AdvisorAssist  LLC  
  5. 5. 5   ARendee  Poll  (Social  Media  Webinar,  February  2013)   ©  Copyright  2013  AdvisorAssist  LLC  
  6. 6. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  7. 7. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  8. 8. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  9. 9.     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. 10. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  11. 11. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  12. 12. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  13. 13. 13   What  is  your  biggest  risk  or  concern?   Hint:  It  should  not  be  the  SEC,  the  States  or  FINRA…   Segment  your  networks!   ©  Copyright  2013  AdvisorAssist  LLC  
  14. 14. 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!   ©  Copyright  2013  AdvisorAssist  LLC  
  15. 15. 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”   ©  Copyright  2013  AdvisorAssist  LLC  
  16. 16. 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”   ©  Copyright  2013  AdvisorAssist  LLC  
  17. 17. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  18. 18. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  19. 19. 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   ©  Copyright  2013  AdvisorAssist  LLC  
  20. 20. 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   ©  Copyright  2013  AdvisorAssist  LLC