Financial advisers are scratching their heads as they try to decipher the compliance and regulatory ramifications of a privacy fiasco with Google's Buzz.
Financial advisers are scratching their heads as they try to decipher the compliance and regulatory ramifications of a privacy fiasco with Google's Buzz.
Several readers responded to my column last week and posted concerns about using Buzz. What's more, some advisers contacted me directly to get some clarity on using the many features of the new social-media tool, which was built into Gmail, Google's extremely popular web-based e-mail system.
The problems all started when Google automatically enrolled Gmail users to the Buzz service and revealed the identities of the people whom they e-mailed most frequently. Buzz automatically revealed Gmail account users' full names to every one of their contacts instead of whatever nickname a user had chosen to use with the account.
The blunder, of course, was met with a ton of complaints.
All these issues aside, any advisers interested in using Buzz should do as I have suggested for other social-networking services: Consult your compliance officer first.
If you are a registered representative, chances are good that you are either barred from using Buzz or that you must receive prior approval for any Buzz posts that you make.
Additionally, all financial advisory professionals must archive their social-media content, and there is no easy way of doing that in Buzz, other than making sure all posts are sent to your e-mail system.
Chances are very good that providers of social-media archiving such as Arkovi, Smarsh and Socialware will come up with a solution eventually, but that isn't the case just yet.
From Google's perspective, making the identities public is a convenience for all involved. Rather than leaving the selection of initial contacts up to the the user, this method was meant to be a way to boost usage right off the bat.
Determining the line of demarcation between what is private and what is public is the key here, and the waters remain muddy.
“There remains this illusion of privacy, that there is an expectation of privacy when it comes to e-mail, even someone's work e-mail,” said Jon Neiditz, an attorney with Nelson Mullins Riley & Scarborough LLP.
“It's only that they've stepped over a line that other social-networking products haven't seemed to yet by extracting the information from e-mail rather than giving them the choice, which other social-networking [products] typically do.”
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TO CONVERT OR NOT TO CONVERT?
Money Tree Software is joining the ranks of financial planning software vendors and others in providing Roth individual retirement account conversion tools. That company last week expanded the Roth Conversion Analysis model in its Distribution Solutions software.
The new product includes updated calculations and reports based on a lot of adviser feedback over the past few months.
Among the changes are more detailed tax analysis on single-year or multiyear conversion examples, inclusion of taxable accounts for opportunity cost tracking, and tax calculations that have been indexed for inflation — something that has been lacking in many free calculators.
Advisers can quickly run calculations to check out potential costs and benefits of a conversion, and generate a 12-page report outlining the conversion effects in detailed calculation tables that illustrate taxes. Distribution Solutions contains the following analyses: Roth conversion, 72(t) and required minimum distributions, pension annuity versus lump sum, pension dimensions, lump-sum distribution versus IRA rollover, and inflation effects illustration.
The software is available for a two-week free trial. The purchase price is $269 with an annual renewal fee of $100.
Money Tree has posted a sample IRA-to-Roth conversion report in PDF format on its website (money-tree.com).
E-mail Davis D. Janowski at djanowski@investmentnews.com.
