How to Get Better Results from Social Media

But with stringent rules and regulations from FINRA and the SEC in place, many advisors have shied away from embracing social media to build their businesses. InvestmentNews research shows that uncertainty over compliance and regulatory rules is the #1 reason that advisors do not use social media.

New SEC Guidance… and What It Means for You

Now, however, the SEC has loosened its stance on how financial advisors can leverage social channels. The biggest change, of course, is that financial advisors may now promote client reviews that appear on third-party social media sites like Yelp. (They still cannot, however, solicit client reviews for their own social media pages; pay for positive reviews; or edit/hide negative reviews.)

And while the SEC still prohibits use of testimonials in advertising, advisors may now indicate (by providing links on their websites, for example) that there are testimonials available on third-party sites. According to an SEC statement, this allows advisors to “signal to clients and prospective clients that they can research public commentary about the investment advisor or IAR on an independent social media site.”

It's important to note, however, that endorsements or recommendations on a LinkedIn profile are still not allowed, since a LinkedIn profile is within an advisor's control. The SEC has, however, clarified that it is okay to connect with your clients on LinkedIn; having someone in your network is not considered an endorsement as long as there is no indication that the person is a client.

So, for advisors who have been afraid to start experimenting with social media, LinkedIn is a great place to start. Building a professional profile is not difficult, and connecting with your clients is a safe way to expand your reach. For example, if you see that a client is connected to someone you'd like to learn more about, you can ask your client if he or she is willing to make introductions.

The next step in building a social media presence is to start promoting your expertise via social channels. One example of this is writing a blog post that you then syndicate on Twitter.

Advisors like Jeff Ross have been very successful at attracting new business by sharing their insight on a variety of finance-related topics on a blog. (And don't worry about stripping the personality out of your posts—the SEC has clarified that advisors may comment on their personal lives via a social media channel that is used for business purposes.)

What the SEC Didn't Change

The SEC's new guidance certainly makes it easier for advisors to take advantage of social channels, but there are a few things that have not changed. As Michael Kitces, director of research at Pinnacle Advisory Group, notes on his blog, “these rules do nothing to change the ongoing requirement that investment advisers must have a process to archive and monitor social media use.”

In other words, advisory firms still need to have a concrete process in place for archiving and monitoring social media use before they jump into the social arena (just as they must for archiving and monitoring email use), because the regulating bodies consider social media records to be corporate business records.

Keeping track of social media activity is undoubtedly more challenging than keeping track of more traditional records like contracts or new account paperwork. It's also more difficult than keeping track of email messages, which can usually be found on a corporate server or an employee desktop after they have been sent. With social media, however, people can alter or delete anything they post on social media within seconds of its publication, and unless a firm has an archiving solution in place, there's generally no record of these changes anywhere.

When it comes to social media management, here are three best practices financial advisory firms should keep in mind:

Treat social media like advertising. Provide compliance officers and the management team a place to review and approve social media posts before they go live. This ensures that inappropriate content is not made public and gives advisors—especially those without much experience in the social media realm—peace of mind before they post.

Provide a platform for posting. Rather than asking advisors to post directly to their various social media accounts, providing a platform through which they can post approved content to a variety of networks gives the firm greater visibility into social media activity.

Make everything auditable. All social media posts should be captured and stored—along with information about the advisor who created the post, date/time the post was made and where the post was published. Ideally, the firm's social media archiving solution will integrate with a document management system like Laserfiche, which is used to store all of the firm's content. This ensures that everything is in the same place and stored according to the same conventions, which makes content easy to find in the event of an audit.

In today's competitive landscape, taking advantage of new media is critical to continued success. By taking best-practice approach to social media and archiving, firms enable their advisors to leverage social media channels with greater confidence and superior results.

Michael Laks is the financial program strategist at Laserfiche, where he focuses on complex financial services issues involving regulatory compliance, integration with existing business applications and enterprise business process automation. He speaks frequently on using technology to create back office efficiencies, developing effective technology integration strategies and simplifying information governance.