April Fool's Day isn't the only day advisors might be foolish. If you don't have a social media policy in place, you are putting your firm at risk.

Think about the history of e-mail and its evolution. When that technology was rolled out, policies were put in place because hundreds or even thousands of people could be contacted in seconds with one e-mail. Social media, with its opportunity for communications to go viral, can go to millions in no time at all.

Take a test to see if you are a fool:
    Do you have a social media policy?
    Do you train on the policy?
    Do you go back and review that your employees are in compliance with your policy?

If you answered "no" to any of these questions, you are a social media fool. (No offense, as most advisors still fit in this category.)

Don't Make A Wiener Mistake
We all know about the ex-Congressman, Anthony Weiner, and his explicit photos on his Twitter account. Weiner-Gate was a late-night talk show dream come true and it cost the representative from New York his job and likely his career.

Your firm might not be making that kind of mistake, but it is at risk of having employees do stupid things online. If you never told them that the company restricts that kind of activity, your company might not be able to take the appropriate actions needed to avert a reputation disaster, discipline the associate and make things right.

Compliance Requirements
Although there's too much on compliance policies to cover in one article, know that you should have a policy, employees should be trained on the policy, and the firm should check that it and the employees are in compliance.

SEC Spokesman, John Nester was not as blunt around the needs for content policies and training around social media, when he stated, "It's something [advisors] need to consider. Firms may also want to consider implementing training to promote compliance and prevent potential securities laws violations."

Even the SEC's January 2012 Risk Alert has wording that is soft. For example, it states, "A firm may consider" instead of "A firm should have content standards." Another example is seen in, "A firm may consider implementing training related to social media" instead of saying firms should have training.

Joe Price, Finra senior vice president, was a little more direct, when he said, "Broker-dealers' employees are using social media to engage in personal communications with their friends and family. If those communications cross over to discussions of the firm's business, Finra rules and the rules under the federal securities laws are implicated. Firms must train their employees so that they can recognize and distinguish business communications from non-business communications."

To be safe, firms should create a compliance hotline so that employees can ask if what they are about to do online is appropriate or not, just in case the guidelines are not clear.

A Point For Debate
One question that will arise, "Do employees own their social media profiles or does the firm?" The quick answer is that the employee owns their own page. (Really the social network does), but as soon as they put company information on their page, they become a public face of an organization.

It is a tricky topic, but firms need to say, "If you want to work here, we need you to act within a manner that represents our brand in a good light and stay within strict industry regulations."

One Advisor's Experience
"Personal privacy of employees is an issue that our firm respects and appreciates. But the fact of the matter is that our industry requires industry participants to forfeit some privacy for the sake of investor protection and investor confidence in the fairness of capital markets. Many industry employees have historically been comfortable with the requirement of fingerprinting upon taking a new job. Employer access to employee brokerage account statements and trading preclearance discloses very personal financial information, but the connection of these issues to client interests is fairly straightforward for employees," said Matthew Slaney, principal and portfolio manager at FinArc LLC.

Slaney added, "Granting employers and regulators access to employee social media accounts can require more education on the reasons for these controls, particularly if an employee views a social media account as personal and not connected to the business. Our firm has chosen to address this issue through a combination of education, written policies and employee agreements to adhere to these policies, along with the use of an automated social media service that monitors and archives social media posts and requires preclearance of posts to certain social media accounts."

Stay Up On Privacy Settings
As social media sites evolve, messages will not have to be blasted to all those in social networks. For example, in 2011, Facebook and Google+ allowed for messages to go out to limited groups. This segmenting can help keep personal communications personal, allowing business communications can go to those they are intended to reach.

It still does not change the guidelines, but it does aid employees to be smarter with how they communicate.

Along With A Social Media Policy
Social media has become so big, it impacts so many disciplines within a firm, including management, marketing, sales, compliance, human resources, etc. For that reason, here is a short list of other related documents that social media guidelines impact:
    A media relations policy.
    HR policies (e.g. on the topic of harassment, diversity, confidentiality, privacy, etc.)
    Job descriptions with clear performance goals.
    Technology security and accessibility.
    A disaster recovery plan.
    And more.

Sources For More Information
One great example of social media policies and training outside of the industry is provided by the U.S. military. Check out the Army's SlideShare page to see its handbook, protecting military members, the Army and in some ways the United States.

The National Labor Relations Board has also provided information that is helpful. Plus, a quick Google search will bring up all kinds of policy examples.

If you are using an archiving service, like Arkovi, or a compliance vendor like MarketCounsel, they often provide a sample policy to start with and then and advisory firm can customize it as needed.

Don't Be A Fool ... Use Common Sense
It is scary to think about the risks with social media, but a "do not use" policy is a huge mistake. To be successful in the future, a firm will need to have a strong online presence. With that said, if an organization is going to use social media, it should protect the entity and the brand with a social media policy that doesn't just sit on the shelf, but is actually used.

Hopefully my advice pushes advisors harder to take some action in this area this year.

Note: As always, check with your compliance department for its specific guidelines on what your organization will allow you to do with social networks. It is strongly recommended you hire an archiving service to capture all social media communications.

Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at www.byrnesconsulting.com.