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Financial Institutions and Social Media

This POV is here to provide guidance on how financial and investment management institutions can use social media to drive business relationships in compliance with strict government regulations.

Financial Institutions and Social Media

  1. 1. FinancialInstitutions andSocial Media Melanie Taylor Vice President October 2012
  2. 2. 2 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012 Table of Contents The Purpose of this POV 3 What are the FINRA regulations and what do they mean? 4 Third-Party Moderation Partners 6 How are financial institutions currently using social media? 8 Recommendations for activating social networks for financial institutions 12 Resources 13 About Social@Ogilvy 14
  3. 3. 3 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012The Purpose of this POVT his POV is here to provide guidance rules and regulations from state regulators, on how financial and investment the SEC and FINRA. These rules require all management institutions can use activity related to the business to be recordedsocial media to drive business relationships and archived, and requires the firm to createin compliance with strict government defined policies and procedures.regulations. There are several software companies thatSummary have developed archival and compliance solutions for financial institutions. We evaluateLike other industries, financial firms have some leading providers here, as well as somebeen eager to leverage the popularity of social guidance on choosing a provider. Many banksmedia to service their business. However, to and investment management firms haveensure that investors are protected from false already created a social media presence withor misleading claims and representations, and different objectives and employee roll-outfirms are able to effectively and appropriately plans. We can learn from their experiencesupervise their associated persons’ and help firms create the best plan for theirparticipation in social media sites, the financial organization.industry is subject to strict communications
  4. 4. 4 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012What are the FINRA regulationsand what do they mean?B ased on FINRA guidelines from 2010 and 2011, recent rulings by the SEC and a state regulator’s deficiency letter obtained by Thomson Reuters in May 2012, we have compiled the following summary of what the rules mean fora financial services firm that wants to participate in social media. Although thesemostly apply to investment firms and brokerages, retail banks that sell securitiesalso must comply with these rules. 1 Record-keeping. Every firm 2 Suitability (recommendations that intends to communicate, or to customers) responsibilities. permit its associated persons NASD Rule 2310 states that the to communicate, through social person receiving an investment media sites must first ensure recommendation must be that it can retain records suitable for it. That means that of those communications. an untargeted social media post Firms cannot delete, and or communication that goes must archive, all social media to a large group (like LinkedIn activities. There is software connections), must be suitable available to help with that, for all of them. An important discussed within. factor in this regard is whether a particular communication from a broker-dealer to a customer reasonably would be viewed as a “call to action.” For example, some states have ruled that “Liking” a brand on Facebook can be seen as a recommendation.
  5. 5. 5 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 20123 Pre-approval of Content. 4 Supervision of social 5 Third-party posts. Social All static content (such as media sites. Firms are media posts from third Facebook and LinkedIn required to supervise parties are not considered profiles) requires interactive communication communications from a documented pre-approval on social media sites firm unless the firm has before posting. A static and adopt policies to endorsed or is involved posting is deemed an stay in compliance with in the preparation of the “advertisement” under FINRA guidelines. For content. This means that NASD Rule 2210 and example, firms may adopt firms are not responsible therefore requires a procedures that require for what others say or registered principal to principal review of some claim about their products approve the posting prior or all interactive electronic and services, unless they to use. Interactive content communications prior to actively involve themselves (the stream of updates use, or may adopt various with the third-party to Twitter, LinkedIn, methods of post-use content. Under certain Facebook wall content and review, including sampling circumstances, however, other networks) doesn’t and lexicon-based search third-party posts may need vetting, but must be methodologies. become attributable to the supervised — sampled firm. Whether third-party regularly after posting, content is attributable to a for compliance violations. firm depends on whether These rules apply to all the firm has (1) involved content of a business itself in the preparation of nature, whether from an the content or (2) explicitly official company account or implicitly endorsed or or an employee’s own approved the content. personal account.
  6. 6. 6 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012Third-Party Moderation PartnersI n order to maintain compliance with all 1 What types of archiving and compliance of these rules and regulations (archives, software is your organization already using moderation, approved posts), savvy financial for online communications?services firms are partnering with one ofseveral Web-based software providers to 2 How many employees need access to thehelp automate these required processes. software?Some vendors support the archiving process,others focus on compliance, and a few do both 3 What platforms do you need to archive?(most of these platforms work through proxyredirect, so will only work when employees 4 Do you also need content libraryaccess these sites from the office – though capabilities?some are expanding to include coverage frommobile devices, as well.) Choosing a provider Following is a summary of some top providers.should be based on several things: Compliance and Archiving Compliance and Archiving Works exclusively with financial Archiving Only companies, which ensures tight compliance with all new rulings. They also archive all social media activity and provide a pre- and post-approval Offers a full service solution for financial support system. There is an additional firms that need archiving, monitoring, social media relationship offering that maintaining and surveillance of the tracks engagement metrics. activities on social media. Arkovi’s compliance tools also enable the capture, policy enforcement and pre- review of LI, TW, and FB with automatic export to our email archiving partners, for archiving, supervision, eDiscovery and audits.
  7. 7. 7 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012Compliance only Compliance and Archiving Compliance and ArchivingA compliance and analytics Captures and maintains posts Archiving Onlyservice provider. The analytics for the five key platforms.module allows a user to do Clients can also opt fora deep dive into all social content libraries, and getplatforms, to determine support from any device or Smarsh provides complianceoverall reach and strength of interface. They can capture and archiving tools similarindividual posts. Can set up advisor updates for post- to other platforms. Thepre-approved content, and approval. Hearsay can either difference for them isthere is a lexicon library for retain the data it captures security. They own andoriginal posts. Rather than or push it out to a client’s maintain all their own serversarchive data, they push the system. Uniquely allows that archive a company’srecords to a firm’s content clients to choose features a la data. They also support postsmanagement platform. Plus, carte. for Salesforce Chatter, Jivethey have an Android mobile and Yammer, in addition toapplication. Facebook, Linkedin, and Twitter.
  8. 8. 8 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012How are financial institutionscurrently using social media?M any financial services firms have moderated and archived by financial firms, tested social media activations within and posts must be pre-approved, often in the the FINRA guidelines, with some form of a content library for employees tosuccess. There have been two approaches choose from, some firms are able to attributethat firms have embraced: (1) brand-led and some business success from social media(2) employee-led. And many firms are testing engagement.the waters of both. Because brokers/advisorsare the sales generators and often the face Morgan Stanley Smith Barney has been slowlyof a firm, activating their networks can be rolling out access to Twitter and LinkedIn,more beneficial than a corporate-voiced using the Socialware platform to provide pre-social platform. However, having multiple approved posts. Many pre-approved poststouch points opens up exposure to risk and include links to original content found on thecompliance issues, and therefore, may not corporate website, or public content frombe the best way of beginning a social media other financial news provider sites. All brokersprogram for a firm. Although all profiles on use the letters MSSB in their Twitter handle,Facebook, LinkedIn and Twitter are required branded wallpaperto be and link to their profile pages on the Morgan Stanley website. They use previously approved language on their LinkedIn pages after a personal summary.
  9. 9. 9 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012Have you gained new clientsthrough engagement on LinkedIn? Corresponding gain in assets under management from new clients Less than $500K 42% NO 38% $500 to $999 YES 62% 20% $1M to $4.9M 20% More than $5M 32% 12% Source: LinkedIn, 2012The consensus so far in Morgan Stanley is that Like Morgan Stanley, Goldman Sachs hasTwitter is helping brokers stay connected to steered clear of Facebook activity on behalf oftheir clients with newsworthy and informative the brand. This is likely due to the challengeupdates, but they are having more business of managing negative comments posted to theluck with LinkedIn ,where one agent reported wall. Goldman Sachs has instead branched outbringing in over $10MM worth of business, to use YouTube to reach their target audiencedue to connections leading to conversations. on a social platform. However, they do notThis is supported with research done by allow comments on their videos, thereforeLinkedIn, showing more than 60% of financial eliminating the social engagement. The videosconsultants were using the platform to find do remain shareable. Goldman Sachs alsonew prospects. uses Twitter (they launched in May 2012) and a company page on LinkedIn. Their social media goals are more about building thought leadership and brand visibility (based on their Social Media Manager job posting).
  10. 10. 10 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012One investment brokerage that maintains an Several banks, like Deutsche Bank and Wellsactive presence on Facebook is Vanguard, Fargo, also engage with social media. Wellswhich was the first brand to lead the way Fargo has allowed some mortgage bankersin social media in 2010, just as the SEC and to have Facebook pages to communicate withFINRA released their guidelines. However, homeowners. Other banks, like Deutshe Bank,their Facebook page does have some negative have identified leaders to be the voice of thecomments on the small section of the brand in social media. All of these selectedTimeline designated for external wall posts. people are using pre-approved posts, andA Vanguard representative usually responds following strict social media policies per thewith a comment to help solve the problems FINRA guidelines.regarding issues with funds or process, butspecific investment complaints are left withouta response.
  11. 11. 11 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012Social@Ogilvy has worked with Citizen’s Another option to engage socially withoutBank to create those pre-approved posts using social platforms like Twitter or LinkedInthat the compliance team approves. We used is to create an Influencer Network to helpa risk response matrix to identify strategic extend the reach of a message online, or toopportunities for the brand to join the provide feedback to the financial institution.conversation, and defined the best ways to do Social@Ogilvy helped TDAmeritrade do justthat. that when they were launching their Investools products. Using our Influencer Relationship Management process, we created a network of online influencers that actively blogged about the financial industry, to help TDAmeritrade create their online tools offering.
  12. 12. 12 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER 2012Recommendations for activatingsocial networks for financialinstitutionsW e believe that there is a huge 3 Develop a social media strategy with opportunity for financial services defined and measurable goals to to use social media to help grow demonstrate the impact on the business;their businesses through a strategic use of it’s not just about launching a Twitter page.engagement tactics, while remaining withinall government regulations. The following are 4 Create a pre-approved content library tokey steps to creating a social presence for your activate in social channels (if applicable).brand: Then, develop a process to keep it relevant with timely updates.1 Develop detailed enterprise-wide social media policies and guidelines. Then, 5 Support the program with a detailed develop a training program to ensure that moderation plan to ensure compliance for all employees are aware of the policies in all employees across all platforms. place and the reasons why. Want to get started immediately? Contact your2 Choose an archiving partner to meet Ogilvy partner representative for additional FINRA and SEC retention guidelines for details, project management schedules and eDiscovery. Social@Ogilvy can help you executing a scope of work. choose the best one for your social media plans and your organization size.
  13. 13. 13 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA OCTOBER Dealbook/New York Times Online, On Wall St., Keeping a Tight Rein on Twitter, W. Alden, MarHarvard Business Review: Online, Social Media 21, 2012Compliance Isn’t Fun, But It’s Necessary Holmes, Aug 23, 2012 wall-st-keeping-a-tight-rein-on-twitter/cs/2012/08/social_media_compliance_isnt.html FTI Consulting, http://www.fticonsulting. com/global2/media/collateral/united-states/, Creating a FINRA-Friendly financial-advisors-use-of-social-media-Social Media Plan, S. Opplinger, Mar moves-from-early-adoption-to-mainstream.27, 2012 pdfchannels/creating-a-finra-friendly-social-media-p/232700252 Fourth Source: Why the financial sector has turned its back on social media marketing, A. Cooper, Aug 2, 2012 why-financial-sector-turned-back-social- media-marketing-10018industry/@ip/@reg/@notice/documents/notices/p120779.pdf, Got the Social Media Spins? Help Is On The Way, L. Barack,industry/@ip/@reg/@notice/documents/ Feb 2, 2012 resources-amp-community/got-social- media-spins-help-wayThomson Reuters Online: State regulator’sdeficiency letter offers clues for social- policies, J. Wallace, May 29, 2012 com/?p=60
  14. 14. About Social@OgilvyS ocial@Ogilvy is the largest social media marketing communications network in the world. Named 2011 Global Digital/Social Consultancy of the Year by The Holmes Report, the practiceleverages social media expertise across all Ogilvy Mather disciplines,offering an extensive list of services within the foundational businesssolutions – Listening and Analytics; Social Business Solutions; SocialMedia Marketing and Communications; Social Shopping; Social CRM;Social Care; and Conversation Impact.For more information, visit and connect withus at,, and

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This POV is here to provide guidance on how financial and investment management institutions can use social media to drive business relationships in compliance with strict government regulations.


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