How LA Investment Advisors
Manage Social Media Accounts
Courtesy of FPA Technology Services, Inc.
http://www.TechGuideforLAInvestmentAdvisors.com
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Social media accounts
are now an important part
of doing business in the
financial services industry
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40%of the advisors surveyed
said they acquired new clients
through Facebook,
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while 25% used LinkedIn,
and 21% utilized Twitter
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Many financial advisors
in Los Angeles shy away
from social media accounts
because they are concerned
about compliance issues
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While this discretion
is understandable,
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they should also be aware
that the current financial
services rules are surprisingly
flexible when it comes to
effective use of social media
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Regulatory Bodies
and Social Media
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When it comes to social media
accounts,
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FINRA, SIPC, and other
regulatory bodies have not
established new usage rules
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The SEC simply states that an
advisor’s use of social media
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has to comply with the
federal securities laws,
namely recordkeeping,
antifraud, and compliance
requirements
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Business vs. Personal
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As a rule, an advisor’s
personal social media profiles
do not have to be monitored
and archived
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But the situation changes if they
openly discuss business matters
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Recommendations on
Social Media
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Under FINRA rule 2111,
investment advisors need
to have a reasonable basis
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to believe that an investment
recommendation is suitable
for a certain customer based
on that customer’s investment
profile
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It’s a required level of
personalization that cannot be
applied universally to an entire
group of Facebook friends and
Twitter followers,
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so using social media to make
investment recommendations
is not permitted
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For added protection, advisors
should post a disclaimer on
their social media profiles
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saying that none of their posts
should be construed as
investment advice
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Recordkeeping Requirements
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Financial advisory firms are
obligated to keep records of
social media communications
if the contents constitute
business communications
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Like Buttons and the
Testimonials Rule
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According to the SEC,
if a third party uses the ‘like’
button on an advisor’s
social media account,
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it could be construed as a
testimonial if it reflects a client’s
experience with the advisor
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To play it safe, advisors should
refrain from posting anything
that could be called a
testimonial if it is ‘liked’
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and disable the endorsements
section of their LinkedIn profile
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Bottom Line
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Today’s tech-savvy investors
are turning to social media
outlets to make contacts
and manage their portfolios
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LA investment advisors can
and should make use of
LinkedIn, Twitter, and Facebook
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to attract and connect
with clients, provided a few
simple guidelines are observed
along the way
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Does your investment advisor
firm participate in social
media?
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Let us know your thoughts
in the Comments box below
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