Social Media Compliance

Social media has become an essential tool for financial advisors seeking to build their brand, establish thought leadership, and connect with clients and prospects. However, navigating the compliance requirements for social media use remains challenging for many firms.

The regulatory landscape continues to evolve, with recent enforcement actions highlighting the heightened scrutiny of digital communications. This article provides a roadmap for creating a social media strategy that aims to drive business growth while striving to maintain regulatory compliance.

The Current Regulatory Landscape

Financial advisors' social media activities are primarily governed by:

• SEC Marketing Rule: Covers advertisements, including most social media content
• Books and Records Rule: Requires retention of business communications, including social media
• Regulation S-P: Addresses privacy concerns in digital communications
• FINRA Rules: For dual registrants, additional requirements apply

Recent regulatory developments have emphasized:

• The need to capture and archive all business-related communications
• Heightened scrutiny of performance claims on social platforms
• Focus on disclosure of material conflicts in influencer partnerships
• Concern about mixing personal and professional communications

Building a Compliant Social Media Framework

A comprehensive social media compliance framework includes six key components:

1. Develop a Clear Social Media Policy

Your social media policy should address:

• Approved platforms: Specify which social media platforms may be used for business purposes
• Account ownership: Clarify whether accounts are firm-owned or personal
• Content guidelines: Establish what content is permitted, prohibited, or requires pre-approval
• Disclosure requirements: Define standardized disclosures for different types of content
• Personal vs. professional boundaries: Provide guidance on separating personal and business communications
• Crisis management protocols: Outline procedures for addressing potential issues

2. Implement a Content Review Process

Establish a tiered review system:

• Pre-approved content: Develop a library of pre-approved content that advisors can share without additional review
• Expedited review: Create a streamlined process for low-risk content (e.g., sharing industry news with minimal commentary)
• Full review: Implement comprehensive review for high-risk content (e.g., performance discussions, investment recommendations)
• Real-time engagement guidelines: Provide clear parameters for responding to comments and messages

3. Adopt Comprehensive Archiving Solutions

Ensure your archiving approach includes:

• Capture of all business-related content across approved platforms
• Preservation of content in its native format, including images and videos
• Archiving of interactive elements (comments, likes, shares)
• Maintenance of content context and metadata
• Searchable repository for supervisory review and regulatory examinations

4. Provide Ongoing Training

Develop training that covers:

• Regulatory requirements applicable to social media
• Firm policies and procedures for social media use
• Recognition of content that requires pre-approval
• Best practices for effective and compliant engagement
• Real-world examples and case studies of compliance issues

5. Conduct Regular Supervision and Monitoring

Implement a supervision program that includes:

• Risk-based review of social media activity
• Lexicon-based surveillance for problematic content
• Periodic manual review of advisor profiles and activities
• Documentation of supervisory activities
• Trend analysis to identify potential compliance gaps

6. Perform Periodic Program Assessment

Regularly evaluate your social media program by:

• Reviewing and updating policies to reflect regulatory changes
• Testing archiving systems to ensure complete capture
• Assessing the effectiveness of supervision procedures
• Identifying and addressing emerging risks
• Incorporating feedback from advisors and compliance staff

Platform-Specific Compliance Considerations

Each social media platform presents unique compliance challenges:

LinkedIn

• Monitor profile changes, particularly in the experience and services sections
• Review connection requests to avoid implications of client testimonials
• Establish guidelines for endorsements and recommendations
• Consider compliance implications of LinkedIn's "Creator Mode"

Twitter/X

• Implement strategies for including required disclosures despite character limitations
• Establish guidelines for retweeting third-party content
• Consider compliance implications of Twitter Spaces and live audio conversations

Facebook/Instagram

• Develop policies for separating personal and professional use
• Address compliance considerations for Stories and live streaming
• Establish guidelines for using hashtags and tagging

TikTok and Emerging Platforms

• Assess regulatory implications before adopting new platforms
• Implement additional oversight for platforms focused on short-form video content
• Consider archiving limitations when evaluating platform use

Best Practices for Advisors

Individual advisors can enhance their social media compliance by:

1. Think before posting: Consider the compliance implications of each post
2. Use standardized disclosures: Develop and consistently use appropriate disclosures
3. Maintain professional boundaries: Be thoughtful about personal vs. professional content
4. Document client communications: Capture any investment discussions that migrate to social platforms
5. Stay informed: Keep up with evolving regulations and firm policies

Looking Forward: Emerging Trends

As social media continues to evolve, advisors should prepare for:

• AI-generated content: Developing compliance frameworks for AI tools in social media
• Influencer partnerships: Navigating the compliance implications of collaboration with financial influencers
• Interactive content: Addressing compliance considerations for polls, quizzes, and other interactive elements
• Decentralized platforms: Evaluating the regulatory implications of emerging social networks

By developing a structured approach to social media compliance, advisory firms can empower their professionals to leverage these powerful platforms while mitigating regulatory risk. The key is to create policies and procedures that are both robust enough to ensure compliance and flexible enough to adapt to the rapidly evolving social media landscape.