IFA Websites

Twitter + Compliance = Rocky road?

Twitter has got to be the bane of a compliance officer’s life. Control, order and regulation crumbles away in the face of it’s social, viral and instant communication methods. However there are things that an adviser can do to stave off the compliance officer’s wrath. This article aims to produce some practical advice for financial advisers on how to use social media and keep on the right side of compliance.

Image stored on Flickr

The first thing I found when researching this article is the lack of UK-based information and guidance for IFAs and financial advisers on how to use Social Media yet stay on the straight and narrow when it comes to compliance. As mentioned previously social media in financial services is to taking off in the UK and I love social media. We should all be using it to engage and foster conversation with new and existing customers and build our online reputations and brand. Now don’t get me wrong, compliance is not my watchword nor is it what gets me out of bed in the morning (quite the opposite actually), however it’s a key part of our industry and as such needs to be considered when using any form of social media online.

How does compliance apply to social media?

With a population who’s digital usage is increasing all the time time (currently at around 70% of the populace with internet access) and a heavier reliance of the web for sourcing information, social media is growing in usage across all demographics. As such IFAs are finding that they can use social media to engage with their customers and colleagues.

Now technically using Twitter, Facebook or a blog falls under the FSA advertising & promotion rules, however it depends on what you talk about. Clearly promoting a specific product from a particular provider is advertising and as such falls in to the remit of the rules – how you’ll manage this with only 140 characters via Twitter is beyond me though.

This is the area that most people will focus on and perhaps do so out of ignorance: Social media is simply digital word of mouth. It’s about engagement and conversation. Building relationships. Encouraging dialogue. Not simply broadcasting your messages. Selling the concept of advice and why consumers would benefit from a professional adviser however is perfectly valid. No specific product is mentioned neither are any rates or prices. It’s this kind of thing that advisers should be looking to social media to help with.

So what are people doing about it?

There is plenty of evidence in the US where regulators are issuing guidance on how to use social media as a direct result of in-house compliance teams taking the “get out of jail free” card of banning all social media interactions, including corporate blogging. There is less in the UK around this based on the research I’ve done so far. However it can be seen that progress is made:

• FINRA has provided specific guidance to brokers
• Adviser Blogger’s Compliance Dangers post takes a look at the potential pitfalls and offers up some advice
• Rock the Boat Marketing’s Compliance Considerations of Social Media Participation highlights some useful articles and thinking around when and how to use social media
• Justin Parks offers up a view on how IFAs face compliance issues with social media

In summary

The key findings from the reading and research I’ve done is that people fundamentally don’t understand social media. As a result they see it as simply a broadcast, straight advertising method. If you are going to use social media as such, then fine. It’s completely the wrong approach, but you must get pre-approval for everything you say. If however you want to use social media to engage and generate dialogue, then by go right ahead. It’s the right approach and allows you to “sell” the concepts underpinning financial planning and wealth management, rather than the solutions to specific needs.

Popularity: 21% [?]

Twitter Delicious Digg Facebook Reddit StumbleUpon

No related posts.