By Amy Mcilwain
More than 5 million high net worth people in North America are using social media to assist with financial decision-making, according to LinkedIn. For financial advisors, social media represents a direct channel to their current and potential clients at a crucial time in their financial journeys.
Indeed, 85 percent of financial advisors are already using social media for business, according to the 2016 Putnam Advisor Social Media Survey. Of these “social advisors,” 80 percent attribute gaining new clients to social media—for a median asset gain of $1.9 million.
As the global industry principal of financial services for Hootsuite, I continue to see two major challenges in particular that organizations in the financial services industry must overcome in order to use social media to its full potential: adhering to compliance requirements and protecting the safety of their firm and customers against threats. Here’s how to address those challenges—and how to capitalize on the opportunities that lay beyond them.
The challenges of social media in financial services (and how to address them)
Challenge: Regulatory compliance
Compliance has traditionally been an obstacle for social media adoption in financial services. However, technology and education have both proven to be instrumental in overcoming this barrier.
The U.S. Security Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) guidelines categorize social media content into two buckets: static content and interactive content.
When it comes to static content, it is considered the same as an advertisement and requires compliance pre-approval.
Interactive content, on the other hand, is considered the same as a presentation in front of a live group of investors. Interactive content does not require pre-approval, but it does require archiving and post-review.
While each company’s compliance team ultimately determines what they consider to be static versus interactive, you’ll find that more often than not, the majority of social media posts and discussions will fall into the interactive category. But be sure to check with your compliance department for specific firm rules.