Desktop version

Home arrow Sociology arrow The socially savvy advisor


The SEC has urged industry leaders to avoid weaving social media compliance into their firm's existing compliance policies and procedures. Social media policies, the regulators say, should stand on their own.

In preparing such a policy, there are a number of issues that its authors need to address, including the following:

1. Who's On First? – The policy should define who among the firm's investment advisor representatives and solicitors can use social media and which forms of social media can be used. Remember that the policy should encompass personal use of social media. Advisors cannot be barred from using social media in their personal lives, but firms must set guidelines for how they use it. Moreover, in all cases, personal use will have to be scrutinized systematically with respect to firm- or product- related information.

2. What's Okay to Say? – Define content standards that apply to any investment recommendations, investment service, or investment performance. One of the decisions that a social media policy author must make is whether to prevent recommendations. If so, be sure to include rules to avoid so-called calls to action. If not, then the standards should assure suitability of the advice given to all of its recipients. Consider requiring pre-approval of all postings, or of some categories of postings (blog posts versus comments in chat rooms, for example).

3. How Much Effort Do I Need? – The level of conversation monitoring should be proportional to the number of users in the firm. The more activity you expect to have on social media, the more oversight you will be expected to perform. The firm's monitoring resources have to be proportionate to social media usage, and vice versa.

4. Who's On Third? – In addition to monitoring its own social media sites, a firm needs to consider those third-party sites – media sites like See- king Alpha or advisor review sites like Yelp – that employees and clients may use, and consider the level of participation – if any – that seems appropriate.

5. Is My Data Overexposed? – A firm should consider if use of a social media site presents information security risks to the firm.

Recordkeeping rules also belong in a firm's social media policy. Your social media content has to be recorded, in effect, to include all postings, e- mail, and chats. You will have to be able to produce all of your historical content upon inspection, and you will need to confirm that you are meeting your retention requirements. Plainly, your standalone social media policy will be supplemented by cross-references to other policies, such as recordkeeping and retention in other aspects of the business. You might consider test driving a third-party record-keeping business to whom you can outsource some of these responsibilities.


Finally, here are a few general principles for creating a social media policy:

1. Simple – Be a Hemingway. Use plain grammar and easily accessible language. If you use heavy jargon and technical terms, your readers at the office are more likely to misunderstand things.

2. Short – Your policy need not be a novel. Keep it short and to the point. Also make it easily navigable for readers by using headers, bullet points, and other formatting tools.

3. Specific – Overly broad policies can create confusion and attract unwanted regulatory attention. In 2012, the National Labor Relations Board accused General Motors of developing unlawful social media policies. The NLRB said the automaker's policies infringed on workers' rights by establishing vague rules, including a prohibition against misleading posts. This outcome serves as an object lesson for financial firms looking to set up boundaries of their own for social media. Be sure to be detailed when you do so.

Creating a social media policy need not be difficult. Indeed, policies from some of the largest companies have been as brief as two pages. They are living documents that evolve, as do the firm's social media initiatives. If you need help, you can get started by using the social media template provided in the book and companion website, (password: savvy123).

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

Related topics