Social media is scary for some, but through archiving firms and some compliance assistance, it is actually easier to capture online communications for compliance purposes than verbal and physical communications.

“Social media content is no different than any other written communication,” says Daniel Bernstein, director of research and development at MarketCounsel. “It’s just delivered by a different means.”

When using social media, the one mistake many firms make is not having a solid social media policy.  If you do not have a policy or if your policy could use some improving, industry experts offer five tips that should help:

1.    Make it a living document.
Blane Warrene, senior vice president of customer communications at RegEd, advises that the policy document will evolve with the regulatory environment and the organizations’ own progress.  

He believes the policy should have a vision for how social media communications will be used. Listening is also important at both the brand and individual level.

A plan for what platforms will be used and who will participate is also important. Regarding personnel, Warrene believes it should be clear who is monitoring, supervising, creating content, etc.

When it comes to management, there should be reporting and activity analysis to make sure the document is being implemented and enforced.

2.    Know the regulations.
Craig Brauff, CEO of Erado, refers clients to SEC and FINRA regulations:

•    SEC IM Guidance Update (March 2013) – Filing Requirements of Certain Electronic Communications.
•    SEC National Examination Risk Alert (January 4, 2012) – Investment Adviser Use of Social Media.
•    SEC 17a-3 and 17a-4 – Books and Records Requirements for Brokers and Dealers Under the Securities Exchange Act of 1934.
•    FINRA Regulatory Notice 12-29 (June 2012) – Communications With the Public.
•    FINRA Regulatory Notice 11-39 (August 2011) – Social Media Websites and the Use of Personal Devices for Business Communications.
•    FINRA Regulatory Notice 10-06 (January 2010) – Social Media Web Sites.
•    NASD Rule 3010 – Supervision (November 30, 2006).

“When we speak with clients we emphasize FINRA Notice to Member 12-29 and the fact that social media content is posted in an online interactive forum and is subject to post review. Also that the content posted in a social media profile (for most broker-dealers and RIAs) has been preapproved as sales literature and, as per 11-39, can be posted without pre-review as long as there is no material change to the content,” says Brauff.

3.    Archive and avoid testimonials.
Attorney Patrick J. Burns Jr.  said, “The SEC has repeatedly suggested RIAs implement a policy and procedures addressing social media. The two main concerns with social media sites are record-keeping requirements and testimonials. As part of SEC record-keeping requirements, communication with clients and advertisements must be maintained for at least five years. As such, RIAs should have the capability to keep a copy of social media text that are posted to the public. This can be done via a screenshot, a word document with the approved language, or an alternative archiving system.”

Burns added, “The SEC has also been firm on their stance to restrict testimonials on social media sites as well firm blogs and websites. This means comments left by clients endorsing RIA’s advisory services must be removed.”

4.    Cover the basics.
Get employee buy-in and permissions and then monitor and retain them.

Bernstein said, “The firm needs to be able to monitor what is being said to ensure the communications are proper. Due to certain state laws which protect individuals from improper employer oversight, the firm should confirm that they can monitor in the states where it has employees and limit the monitoring to compliance requirements rather than filtering personal communications.”

5.    Do not just tell them what not to do.
Victor Gaxiola, social media subject matter expert at Actiance Inc., said, “In my opinion the most important part of the social media policy is to ensure you let people know what they can do as opposed to what they can’t do. There is a big difference in saying, ‘You cannot post on Twitter and Facebook’ and “Given the professional nature of LinkedIn, we encourage our advisors to post relevant content to their professional contacts on LinkedIn.’”

Gaxiola says, “There is no black and white standard policy.”  That leaves it up to your firm to put a policy in place that protects the organization. Hopefully this article helps you take a step in the right direction.

Mike Byrnes is a national speaker and owner of Byrnes Consulting, LLC. His firm provides consulting services to help advisors become even more successful. Need help with business planning, marketing strategy, business development, client service and management effectiveness? Read more at ByrnesConsulting.com and follow @ByrnesConsultin.