5 Steps to Addressing FINRA Regulations in Relation to Social Media

social-media 5 Steps to Addressing FINRA Regulations in Relation to Social Media According to the 7th Annual Investment Management Compliance and Testing Survey, 80 percent of registered investment advisors have adopted a formal, written social media policy. That’s up from 64 percent in 2011, and 43 percent in 2010.

As your firm’s leaders and staff begin to move more and more toward social media for lead generation, relationship building, and research, you must be wondering how you can help mitigate risk when it comes to social networking?

Joanna Belbey, (@Belbey) Social Media and Compliance Specialist at Actiance, Inc., shared this, “Financial services firms are discovering that effective deployment of social media isn’t about technology or compliance, that’s the easy part. Rather it’s about enabling their employees and financial advisors to use an effective tool to establish and nurture relationships.”

“After all,” she said, “That’s what financial services is all about—relationships. And given the highly regulated and conservative nature of the industry, those who wish to introduce social media to their enterprise are advised to take thoughtful approach to gain approval from senior management to proceed.”

In fact, in a recent presentation she hosted at the Business Development Institute’s Social Media Security & Compliance for Financial Institutions workshop, she outlined these areas to focus on, particularly as they relate to FINRA Regulatory Notices 10-06 and 11-39.

5 Steps to Help Mitigate Risk

  1. Understanding:
    1. Your firm’s landscape
    2. It’s social media visibility and range
    3. Who your influencers are and who they are in your niche market
  2. Policy Setting
    1. Engage stakeholders in the process
    2. Consider and address risks in a granular fashion
    3. Work with Human Resources, particularly when it comes to Labor Relations Act #7
    4. Review and refine policies at least annually
  3. Protection
    1. Networks from malware, phishing, attacks, and data leakage
    2. Record and retain communication
  4. Educate
    1. Provide education to all employees, including partners on appropriate use policies and escalation policies
  5. Best Practices
    1. Research, issue, and implement best practices

Additional Resources

Many firms are moving in this direction and social media isn’t going away; if anything it will become a must have to grow your firm in the near future.

If you plan to begin or increase your firm’s presence in the social media space, take these points into consideration. Further consider working with a marketing firm that knows the financial services profession and who can provide sound counsel on how to proceed.

There are many resources available to help you begin the social media journey. You may want to begin by downloading several whitepapers Actiance Inc. offers, including:

  • Legal Issues of Social Networks
  • Meeting FINRA 10-06 Regulatory Requirements
  • Meeting FSA Guidelines

Your Turn

Share your tips for moving into the social media space.

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