Firms that prohibit use of social media are fighting a losing battle, and should instead focus on how to use it compliantly, said attendees at a social media conference in Boston.
At the recent LIMRA and LOMA conference on social media, held in Boston, attendees heard about how to take advantage of social networks and to use the tools compliantly. Still, challenges and confusion exist that are holding back the financial services industry at a time when the tools are becoming even more popular.
Christie Campbell, director of marketing at Socialware, new proprietary research showing that adoption of social networks for business purposes is gaining momentum. She stated that more than 75% of respondents are using LinkedIn (up from 59% last year), more than 50% are using Facebook (up from 25% in 2010), and about 35% are using Twitter (which about doubled in a year's time.)
The conference covered social media from many angles. Here are five confusing points within the industry that surfaced:
1. Constant compliance changes
James Douglas, senior account executive at Smarsh, shared that their recent survey of broker-dealers and registered investment advisors showed the number one concern of respondents is "new and changing regulations."
2. New social networks
Douglas highlighted "new communications channels" as the second highest concern. Google+ is a perfect example of a new social network that was released this July that is confusing things even more. Plus, it is putting pressure on the other networks to match new well-received features.
Social networks are no longer limited to the big three. "Social media functionality is becoming a part of traditional Web sites, and we see this occurring in small communities with local traditional referral networks like the chamber of commerce," said Jessica Shull, in social media marketing at State Farm. "How do you monitor social activities on all of the small sites all across the country?"
3. Disclosure placement
Stephen Selby, director of regulatory services at LIMRA, said, "There are many different regulator and they haven't figured out all the answers. For example, what disclosure goes where?" He was referencing how marketing used to be pushed out in one complete form, but now interactivity has changed how communications take place.
4. Static-interactive combinations
Selby explained how FINRA has been clear about the difference between static and interactive communications, but there are hybrids that create confusion. "You don't have to re-file if the (static) material is the same or substantially the same," Selby said. "However, if someone throws out a conversation changer, is it still the same? One conversation thread can materially change the nature of the conversation." He gave an example of how a Facebook wall might be approved for annuities, but what if the conversation changes to options? Plus, there are numerous less obvious examples.
5. Facebook outside of Facebook.com
Selby talked about another area of confusion, saying, "Facebook Connect is a single sign on for the internet. There have to be more than 500,000 sites using it now." He was describing a tool that allows comments to be made on other websites by logging in through Facebook. He challenged the crowd, "Is that part of your social media policy?"
Selby admitted there is no way to train on every new social media network. Thus, in some cases training should take place based on functions. He then asked, "Or do you train on risks?" The crowd rattled off a laundry list of risks: legal, ethics, business, reputation, productivity, privacy, and data security, so even that approach is even confusing.
One Thing Is Clear
Banning social media outright is no longer an option, which was unanimously agreed upon in a show of hands in Selby's session. Douglas agreed in a separate presentation, saying, "Social media prohibition is not working."