You can’t ignore your employees’ accounts on social media – whether it’s Facebook or Yelp.
That’s what one top expert says when we recently held our Compliant Social Media Summit with FA magazine.
“Even on Yelp, if your employee is in any way representing your firm and you fall under SEC or Finra rules, that communications can be deemed official and needs to follow rules, such as recordkeeping and archiving,” said Stuart Fross, former general counsel to Fidelity International and counsel to Finect, a compliant social communications platform for financial professionals and firms.
He says even those platforms can be forums where employees – such as financial advisors or brokers -- are representing your firm.
LinkedIn Vs. Facebook
Take LinkedIn. Fross says the network of professionals is a place where communications almost always matter for regulatory purposes since the individual is representing their firm through their profile. fter all, the first thing on LinkedIn is current employment. However, on Facebook, that might not be the case.
“If the employee purports to limit their Facebook to personal items and in fact is promoting investment opportunities, the firm may be held accountable for the conduct of its associated person,” said Fross, also a partner at Foley & Lardner.
“That’s the case, unless the firm can establish procedures and certification by the employee that the Facebook account is not for business purposes, and also conduct some level of supervision, such as random spot-checking.”
Fross added that companies can monitor an employees’ personal and professional accounts using a platform like Finect. The first step, as part of the process, is having employees’ disclosure whether or not they have social media accounts and certifying compliance with policies.
Jeff Spears, CEO of Sanctuary Wealth Services, an RIA and independent broker-dealer focused on serving breakaway advisors, said advisors are missing the boat if they fail to have a social media presence.
“You may have signed up for Finect or put up a LinkedIn profile, but if you’re still sitting on the sidelines and not active on social media, you may be leaving money on the table.”
Spears pointed out the three main risks of not using social media:
• Opportunity cost: The biggest risk is not taking advantage of social media’s dynamic environment to promote your business.
• Lack of visibility: “It may not be a Super Bowl ad, but more people are now getting information from the Web,” says Spears.
• Letting others define you: “You just don’t want your competitors to define you,” says Spears. “If you are on social media defining yourself, you can prevent that.”
The bottom line: Social media is changing how the financial industry connects and communicates with investors. But companies need to have a clear compliance system in place.
As Fross says, having a system to manage employees in this online world isn’t only essential for firm compliance and marketing leaders, but can serve as a protective measure for employees during regulatory reviews.
Jennifer Openshaw, a columnist for Dow Jones’ MarketWatch, served as host of the Compliant Social Media Summit. She also is president of Finect, an innovative networking platform created solely for the investment industry.