Social Media Compliance Guidelines for Financial Advisors

This post was authored by Marie Swift and originally appeared here on GuideVine.

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Do you know how to think through and manage endorsements and comments on websites and pages under your control?

One piece of SEC guidance that got a big cheer from Financial Advisors and industry social media advocates is that “community” or “fan” pages — if established by an independent third-party to gather community or public sentiment — do not violate the testimonial rule. That just makes sense: if the Advisor has no control over the commentary and posts on the discussion forum, how could he or she be held liable for any comments about services and/or products provided?

For an in-depth look at what Financial Advisors can and can’t do on third-party review sites such as Yelp, Angie’s List, Wallet Hub and GuideVine, click here: Making Sense of the SEC’s Third-Party Review Site Rules

What is important to remember is this: where the Advisor can control the comments, he or she should take great pains not to allow any type of forbidden endorsement or testimonial to occur.

So when thinking about LinkedIn, Facebook, blogs and other website pages you can control, here are some areas to consider.

DECIDE HOW TO HANDLE THE LINKEDIN ENDORSEMENT FEATURE

LinkedIn’s “endorsements” feature on an Advisor’s profile page IS in control of the Advisor. In addition, the endorsement feature provides only positive feedback. With these factors in mind, and because LinkedIn members have the discretion to accept or deny any endorsement, many compliance experts recommend that Advisors turn off this feature. If you and your compliance officer determine that turning off the endorsements feature is a good idea, log in to LinkedIn and click “edit Profile” then “edit Skills and Expertise”. If you already have endorsements on your LinkedIn profile, rather than deleting them, it might be best to simply “Hide” them (who knows – you might not be with the same firm in the future and could potentially show them at some point).

One financial services digital media expert provides some interesting food for thought on her Wired Advisor blog:

“It is my opinion that the social proof gained from showcasing LinkedIn endorsements from your connections on your profile is important, especially since you generally can’t publish recommendations or testimonials,” says Stephanie Sammons, founder of WiredAdvisor.com. “Also, specific clients and prospects are not identified here. It also should be noted that in the SEC policy update, they no longer view non-investment related commentary to be deemed as a testimonial. Therefore it sounds like you can potentially showcase recommendations that relate to community service or religious affiliation (these were the two examples given by the SEC in the update).”

“Given that the term ‘endorsement’ doesn’t actually indicate within the context of the LinkedIn profile a specific testimonial or recommendation, I believe they are very similar to a collection of Facebook fan page ‘likes’. There are no clients or prospects being singled out through these LinkedIn endorsements. This is mentioned in the SEC update as something that would be a violation of the testimonial rule,” Sammons continues.

“These are aggregate endorsements of your skills from any and all of your LinkedIn connections. With this in mind, I would advise that your list of skills remain very general in nature as they relate to your services such as ‘financial planning’, ‘retirement planning’.  None of your skills listed should indicate or point toward performance results,” she concludes.

CHECK WITH YOUR COMPLIANCE OFFICER

Similar to endorsements, LinkedIn’s “recommendations” feature is something a LinkedIn member can control. An Advisor has the ability to accept or deny those types of testimonial comments, most of which are usually independently volunteered.

On LinkedIn (as well as blogs and community forums where the Advisor can turn off the comments feature), most compliance officers typically encourage the Advisor to stay on the safe side and decline to publish (or hide) any comments that could be deemed a testimonial. Many say is it not worth risking any debate as to whether or not the Advisor allowed all comments — both positive and negative – to be seen on the site. Although Sammons observations above do seem to make sense: there may be some gray area if (1) specific clients and prospects are not identified (2) the comments are not investment related. So check with your compliance office or outside legal counsel to get their advice.

On Facebook pages that an Advisory firm controls, many compliance officers are asking Advisors to turn off the Star Ratings feature. To do that, go to the “About” page and find “Page Info” then “Address / Edit”. Deselect “Show map, check-ins and star ratings.”

Some additional pointers:

• Non-investment related commentary, such as comments on religious affiliation, personal character, or community involvement, are not a violation of the rule, so it is up to you and your compliance officer to determine where to draw the line.

• On an Advisor’s social media page or profile, there should not be distinctions between who is a client and who are friends or other connections — so be careful not to have a Twitter list or a Facebook photo album called “clients”. There should be no implication that the contacts/friends have experienced favorable results from the Advisor’s services.

• While the SEC guidance does say that interactive posts made on social sites do not need to be pre-approved, some more conservative firms hold to the requirement that all content on social media needs to be pre-approved before it is published.

• Map out your social media strategy — both from a compliance aspect, as well as a “voice” and “editorial” standpoint before stepping in to the social media waters. Social media and online forums are a great way to “be discoverable” and advance worthwhile causes and educational information. Having a written strategy in place is the best way to go. It will keep you on track if you are doing your own social media and becomes especially important if you ever hand the reins to a marketing manager or social media director.

REMEMBER ONLINE REPUTATION, TOO

Its not just a compliance issue though. Commenting on blogs or photos or Facebook articles is an opportunity for anyone with a good or bad opinion to express those thoughts freely. Many who post do not even consider the reputational consequences of their posts, but smart Financial Advisors and service professional know that every word they post on social media sites can either tear down or build up reputational capital.

Smart Advisors will think twice before posting content on any site, especially when they have had a drink, are tired, stressed or experiencing a sense of exhilaration (any of these situations could skew one’s otherwise judgment). It is important to show some personality from time to time, but doing it in a thoughtful “brand essence” way will pay dividends down the road. For more on “voice”, “authenticity” and “brand essence,” read Finding Your Voice Online and Building Your Brand as a Financial Advisor Today.

What if you feel you’ve been slandered online? While not every site will remove upsetting comments, Facebook may be open to removing egregious content. Facebook page owners can report violations to Facebook’s administrative team using Facebook’s “Report a Violation” page. Read more on eHow