Yesterday, FINRA released guidance that attempts to clarify rules for securities firms and brokers about using social media websites when communicating with the public. Check out the guidelines here. Overall, these guidelines are a good thing for financial advisors. They provide a baseline of rules for anyone under the purview of FINRA to get their feet wet in social media.
But what do these guidelines mean in practice?
Short answer: Nothing. Yet.
Like any new regulation, these guidelines need to be put into practice for anyone to see how they’ll be interpreted. The social media landscape is vast – and a 10-page
document (no matter how hard it tries!) simply can’t outline every “for instance” advisors will come across. The early-adopters will, of course, lead the pack – and time will tell how far the guidelines will allow them to go. Until then, it’s a guessing game.
There was some great news in the 10-pages outlining the new regulations:
- Third Party Posts – Overall, third party posts on social media sites established by advisors are not considered part of the firm’s communication with the public, which opens the door for advisors to consider blogging, Facebook pages, etc – though FINRA does strongly suggest monitoring.
- Static vs. Non Static Content – As pointed out in Rock the Boat Marketing’s post, FINRA’s distinction between “static content” and “non-static content” now makes social media a viable option for advisors. The new guidelines say that static content, like other marketing materials, requires prior approval of a registered principal, while non-static content (i.e. Twitter) does not require prior approval.
But, there’s a lot of work ahead:
- Recordkeeping – FINRA states that firms must set up a system to retain records of all social media communications, and cites technology providers that help firms retain records of communications made through social media.
- Supervision – For firms engaging in social media, FINRA mandates that there is a general policy in place and any advisors who “participate in social media sites for business purposes are appropriately supervised” and receive appropriate training.
Here are a few folks we’re tracking that lead the social media game: Roger Wohlner, CFP, Bill Winterberg and Russ Thorton. Who do you see as “ahead of the pack” in the advisor space?
What do you think? Do you think FINRA’s guidelines are reasonable?
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01/26/2010 at 1:35 PM Permalink
I think this update is a good first step. It addresses a few of the big concerns people have. Firms interested in learning more should check out the Companion Guide to FINRA Social Networking Compliance http://bit.ly/8xT73y. It picks up where Notice 10-06 leaves off, offering additional detail on social networking considerations and a checklist of requirements for choosing a social networking compliance vendor.
01/26/2010 at 3:05 PM Permalink
Thanks, Chad. I agree – these regulations were a good and necessary first step. At least advisors now know that social media is a possibility! Thanks for the link to additional resources.
02/12/2010 at 2:30 PM Permalink
In the guidance from FINRA, one of the other key highlights was rules governing unscripted participation in interactive electronic forums. On your point for third-party content, it is important to note that prior approval is not required so long as two criteria is met. I encourage you to read more about the FINRA guidance here: http://bit.ly/d84X1N
02/12/2010 at 3:43 PM Permalink
I have provided a complete spotlight on the 7 main points of the FINRA webinar. You can check it out here: http://bit.ly/cZ1O1Q