Social Media for financial advisors; what to consider

The folks at RegEd have created a social media policy template that can be used by RIA’s. You can find it here:


They point out that, unlike broker/dealers, there is not a pre-approval requirement for some forms of social media information, but there is still a requirement for RIA’s in these important areas:

· A books and records maintenance requirement for communications

· A prohibition against the use of testimonials

· A policy for the security and protection of customer information

· A written supervisory policies requirement

· An investment adviser’s Code of Ethics

Speaking as someone with some compliance experience, I would have to say that interactive social media has to make most compliance managers squirm a bit. We know that what is said and what is put into writing, cannot be retracted if it violates the policies of state or federal regulators. The investing public has to be protected and sometimes a comment made in the context of social media, at a whim, violates policies meant to keep misleading or incomplete information from those most vulnerable.

For RIA’s who don’t yet have a social media policy, the RegEd template is a good starting point. Combined with input from legal counsel, it provides some guidance that will protect the investing public and the advisor.

In goal setting, the idea is to just do it — just take the first step towards the goal. With social media, the best first step for an RIA is to get some policy or guideline in place. In this case, anything is better than nothing, and something thought out like the RegEd suggested framework is a good starting point.

When you think of most websites, you can picture the “static” content of the site; usually an about page or services page, a contact page, advisor/officer profiles, a terms of use page and several others that are a permanent part of the website. There is also content that is more interactive. Client comments and questions, answers to questions and social media updates are all interactive. The regulators have different requirements for dealing with each one.

You can learn more about the different requirements from a slide show called “8 Things Financial Advisors Should Know About Social Media Compliance” from the folks at Financial Planning. See it here:

Remember, there are still recordkeeping requirements and there are antifraud provisions. Even the most seemingly innocuous comment can be misinformation without the necessary disclosure language, so some training and guidelines go a long way. If you have had training in the compliance considerations for public presentations for instance, then you know that you don’t make specific investment recommendations to a group. The Financial Planning article points out that these rules apply to social media also. Suitability is a real consideration when there may be a thousand or ten thousand readers of a tweet or Facebook update, forum comment or blog posting.

The article also advises against anything that could be construed as a testimonial. They suggest disabling the endorsements feature on Linkedin. They also point out that the ability to “like” something on Facebook can get into a dicey situation, so to be on the safe side, “avoid posting anything that could be deemed as a testimonial.” If nobody can “like” something that smacks of endorsement, then it is the safer road to follow.

This information is only a starting point. Social media can be a great way to carry on a conversation with clients and prospective clients, but it can also be a thorny path to walk. A little knowledge and some good guidelines and policies can go a long way. Get together with competent legal counsel and a tenured compliance manager and hammer out the social media rules for your practice.



* This information is for educational purposes. It does not constitute legal advice. For legal advice, consult with an attorney. Also, consult with your firm’s compliance department for specific firm compliance guidelines.