One thing holding advisors back from using social media is their concern about compliance issues, said Scott Brown, associate director at Market Counsel, who spoke on a panel of social media experts at the FPA Business Solutions conference.

Unclear And Possibly Outdated Rules
In a private discussion with Martin Kurtz, president of the Financial Planning Association, he addressed why the advisor adoption to social media is so low, saying, "There are a lot of issues with regulators.  Advisors do not know what the SEC [and the Financial Industry Regulatory Authority] are looking for."

Brown noted some advisors are frustrated because they are working off of existing regulations, some that date back from 1940. Although communication has changed a lot since then, the SEC really has not done anything to change any laws. Finra has put out regulatory notice 10-06, but Brown said, "There is not a lot of guidance out there.  Advisors need to focus on the existing rules, including the books and records rules and the advertising rules. They need to ask, 'How do I stay in compliance?'"

How Advisors Can Protect Themselves
One example Brown gave was for advisors to avoid posting client recommendations on their LinkedIn profiles so that they don't violate restrictions on testimonials. But someone else can recommend an advisor on his or her own LinkedIn page, he added.


When it comes to visitor comments on a blog, he recommended they all should be preapproved. The good news is that many Web sites allow for this functionality.  "You have to be in control of the content," he said.

A lot of advisors are doing things like friending their chief compliance officer on Facebook so they can better monitor the activity, he added.

Vendors can help advisors stay compliant.  Companies like Socialware, Arkovi and Smarsh were continually recommended at the conference as organizations that can archive social media communications.  In Brown's panel session (one of the most popular), an attendee asked if advisors were using archiving services. A show of hands proved that very few advisors were already doing so.

A Look Forward At Regulation
Brown said, "Social media is here.  The regulators are not going to just say advisors can't use the most popular form of communication."  He noted that sweep letters are going to help them access social media policies.  

Brown ended by saying, "It's a wonderful time to be in a gray area [regarding social media regulation]."  If advisors stick to what they know as compliance best practices, the regulators are likely not going to find major issues, until they better define the rules.  His prediction is that, "I think in the next 24 months you will see a uniformed rule-- 'Harmonization' is the word of the day."

Other article about this conference include Advisor And Publisher, Become A Recognized Expert Online and Six Technology Tips From The FPA Conference.

Note:  If you want to follow what was said about the conference on Twitter, check out hashtag  #BizSol11

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