Desktop version

Home arrow Sociology arrow The socially savvy advisor

What Are the Tensions Between Social Media and Regulation?

When considering the use of social media in the financial advisory space, it's hard not to think about what an odd couple they make. Social platforms allow people to share any thought that comes into their heads with an audience that numbers typically in the hundreds or thousands of people. By comparison, the financial industry is heavily regulated, particularly where communication is concerned. Advisors and their firms are held to account for the way they present themselves on social media, since investors on the Web can be as easily misled as those of 30 or 40 years ago who read bogus investment pitches in newspaper or magazine ads.

Indeed, nearly 75 percent of financial advisors report working for a firm with a written social media policy, and 82 percent of these advisors say the policy restricts social media use or bars it outright. Advisors who want to use social media more actively in their businesses could be excused if they felt a chill in the room.

And yet, consider the odd couple metaphor a little more. At the end of the day, two people with intrinsically different world philosophies and lifestyles still manage to live together. Likewise, financial advisors and regulatory constraints can co-exist in the social media universe.

Are you an advisor who worries about getting flagged in an audit for stepping outside the bounds? Take a page from the advice you offer clients who struggle with reaching their financial goals: Have a plan.

Regulators like firms that lay out their plans for using social media compliantly; indeed, regulators insist on it. Attorney Stuart Fross, former senior vice president of compliance and general counsel at Fidelity International who now works with firms globally, puts it this way: “Having a system to manage social media is a defense.”

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >

Related topics