IA brief: If you haven’t joined the social media bandwagon, you’re not alone

February 27, 2013

By Jason Wallace, Compliance Complete

NEW YORK, Feb. 27 (Thomson Reuters Accelus) – Financial planners use social media in their personal lives but shy away from it professionally out of concern over compliance issues and an uncertain regulatory environment, a recent survey reveals.

The survey of 3,500 certified financial planners was conducted by the Certified Financial Planner Board of Standards and released at the end of January It was accompanied by a social media guide for CFP professionals that can be broadly useful to any investment adviser representative, credentialed or not. 

According to the survey approximately 73% of those surveyed use social media, though only 45% use it for business, the board said.

The top three reasons for not using social media for business included: compliance prohibitions (37%), uncertainty over compliance and regulatory requirements (33%) and lack of time accounting for 20%.

“The overall results of the survey are not surprising at all,” said Paul Cox, CEO of Business Compliance Partners, a San Diego-based compliance consulting firm.

The most often used site among the surveyed was LinkedIn (81.9%), followed by blogs (71.8%), Twitter (45.9%), Google+ (34.5%) and Facebook (19.6%). Cox noted his client base matched the survey, with LinkedIn being the primary, and in many cases the only, social media channel used by investment advisory representatives –although he said was amazed by the percentage using Twitter. “Twitter usage information is surprising as my clients find it difficult to communicate anything meaningful with the required compliance disclosures and Twitter’s character limitations.”

According to the survey, the main reason for using social media professionally was for networking with other financial professionals, arguably in harmony with the high percentage of LinkedIn users. Using the sites for marketing and business promotion took third place after networking and keeping up with professional news and trends.

A majority (70%) of respondents stated their firm or company has a formal social media policy in place. With most, having procedures for monitoring social media sites, limitations on what can be shared and requirements for prior approval of certain content. Facebook was the most often prohibited with Twitter and YouTube following close behind.

The CFP’s social media guide includes best practices for use with all social media. Arguably the most important and practical compliance best practices are “pausing before you post,” “distinguish the public from private,” “use scheduling/monitoring/archiving tools” and “avoiding comments on specific financial strategies or products.” These tips will help create a compliant social media presence.

The guide also looks specifically at LinkedIn, Twitter, Facebook and Google+. On the compliance end, the CFP board highlighted the “recommend” and “endorse” feature of LinkedIn and stressed the importance of monitoring those items for possible recommendations. As far as Facebook, the guide recommends a company or business page which, according to the CFP board, would increase awareness of services, but arguably it can also enable compliance on the supervision front.

Advisers who are hesitant to join the social media craze for professional purposes are not alone. It may take more clarity from the regulators or further evolution of social media channels.


(This article was produced by the Compliance Complete service of Thomson Reuters Accelus (http://accelus.thomsonreuters.com/). Compliance Complete (http://accelus.thomsonreuters.com/solutions/regulatory-intelligence/compliance-complete/) provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter at: http://twitter.com/GRC_Accelus)

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