What the new SEC social media guidance update means for advisorsArticle added by Amy McIlwain on April 29, 2014
Amy McIlwain

Amy McIlwain

Denver, CO

Joined: August 26, 2010

Because current social media platforms continue to evolve and new platforms are constantly emerging, the Securities and Exchange Commission (SEC) needs to stay on their toes to keep up. In an effort to address the changing social media landscape, the SEC recently released a long-awaited social media guidance update.

What changed

The biggest change that comes with this update (SEC 2014-4 guidance) addresses the use of third-party review sites and testimonials.

Third-party reviews

The SEC states that client reviews do not violate its ban on client testimonials as long as they appear on independent social media or review sites. Those sites, however, must let viewers see all public comments, whether good or bad about the advisor. Advisors must have no sway or control over the comments.

ALLOWED: Testimonials on Yelp, Google, or any “advisor review site” (objective site)

NOT ALLOWED: Testimonials written on your Facebook Fan Page (because you control this page), LinkedIn recommendations

Advisors can (and should!) use social media to point prospective clients to those reviews on objective third-party sites. Ex. “Check out what people are saying on Yelp!” They must, however, direct them to a page displaying all reviews (positive and negative) and not a single review.

There have been a few other areas that advisors and the SEC have been on the fence about regarding social media, and this update provided a few statements to eliminate any concern.

Testimonials on outside subjects

Direct testimonials are now OK if they are not relating to your financial expertise, but rather to your community involvement.

“No longer take the position, as [they] did a number of years ago, that an advertisement that contains non-investment related commentary regarding an IAR, such as regarding an IAR’s religious affiliation or community service, may be deemed a testimonial in violation of rule 206(4)-1(a)(1).”

Now you can list your involvement in Habitat for Humanity, your passion for skiing, and your knowledge of antique automobiles as "skills" on LinkedIn for connections to endorse. People do business with those they know, like and trust, and social media provides an opportunity to connect with clients and prospects on a deeper level.

Directing traffic to social sites

Advisors are allowed to acknowledge social media channels in various media.

“An investment adviser or IAR could reference the fact that public commentary regarding the investment adviser or IAR may be found on an independent social media site, and may include the logo of the independent social media site on its non-social media advertisements, without implicating the testimonial rule.”

DO: Tell listeners to “Check us out on Facebook” in a radio spot or interview.

DO: Print “Follow us on Twitter to get up-to-date information and learn more about our company,” in a direct mail piece.

DO NOT: Print a specific testimonial in an advertisement or read one particular (obviously positive) review in an interview.

Additionally, the SEC has made it clear that “friending” someone on Facebook or “connecting” with someone on LinkedIn is not considered a testimonial or endorsement.
What advisors should do differently

1. Actively monitor comments and social media posts. Now that independent third-party review sites are considered compliant, it is more important than ever to know what people are saying about you online. Be aware and actively manage your online presence. Better yet, respond to reviews. If people are saying bad things about you, don’t you want to know why and how you can improve your services? Acknowledge the comment publicly and let them know you’ll be sending a private message to learn more about the matter. Also, depending on the complaint, you may need to document and file with your compliance department.

2. Regularly scan your online presence. Did you know that when you register a company with Google Places (so that it appears on Google Maps), Google automatically makes you a Google+ Local Business page where anyone can leave reviews? In addition to just claiming these pages, make sure that they are up-to-date with current company information.

Furthermore, make sure that there are not multiple Facebook or Twitter pages for your company. All too frequently, we come across companies with multiple profiles on one network, each set up by a different manager within the company, and neither knowing the other exists. Delete excess pages — it will be easier to manage your online presence and allow people to find your correct and updated profile.

To do this, search on Google for your company name and location and check out everything that shows up on the first few pages of search results. This may sound time consuming on the front-end, but it will be well worth the time spent…and the results may surprise you!

3. Re-activate your Facebook ‘reviews’ feature. Because of previous concerns and lack of clarification by governing bodies, most compliance officers recommended turning off Facebook’s "review feature," which also disables the built-in Bing map feature. But now that third-party reviews are allowed, turn this back on! It will make your company more accessible and searchable, as it is Bing-powered.

4. Promote connecting on social networks on all other media. You don’t need to be cautious anymore! Doing a TV interview? End the spot with a quick call-to-action encouraging people to connect and ask additional questions on your favorite social channel. Hosting an event? Make sure to include your social media URLs at the bottom of the invitation/flyer or even the hashtag (#) that will be used for the event.

5. Make sure you are connected with prospects and clients, especially on LinkedIn. With over 62 percent of advisors reporting to have gained new clients from LinkedIn, it is no wonder that this platform is known as the preferred professional social network for advisors. So, after you have a phone call or in-office meeting with a prospective client, find them on LinkedIn and connect. This will help you stay top-of-mind.

Now that the SEC has clarified these areas of confusion, take action! Make sure you are review-ready and remember, although it may seem like the SEC is easing up on social media, make sure to check with your broker/dealer or compliance department and adhere to your social media policy. These changes come with new opportunities but also new risks.

Have additional questions about how this update affects you and your company’s online brand? Ask me using the comment section below.
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