For example, under Financial Industry Regulatory Authority (FINRA) rules, a social network profile that includes an advisor's professional affiliation is treated as advertising, meaning that it is subject to a regulatory compliance review prior to publication. To use even a professionally oriented social network such as LinkedIn, a financial advisor has to carefully turn off features that most other professionals would welcome, such as the ability for clients to post endorsements to his or her profile. And even the most carefully worded status post could attract comments from another user that an advisor wouldn't want to be associated with.
The rules are actually more complicated than that, given that some financial professionals are governed by other sets of rules (or multiple sets of rules) depending on how they are licensed or who they work for. In general, the regulations on social media are nothing more than new interpretations of longstanding rules intended to prevent advisors from making exaggerated or deceptive claims, while requiring them to archive all written communications for regulatory review. Because of these complications, many financial advisors have been discouraged from actively using social networks in a professional capacity. Large firms have been particularly conservative on that front.
In a previous life as a broker dealer, LinkedFA President Jason Bishara said he watched the same pattern play out with a newfangled technology called email, when he wanted to use it to replace marketing media such as postcard mailers. "The corporate office said, 'You can't use it,'" he said.
Bishara eventually left his job at Global Capital Securities to start a company that created a Web-based system for sending out email marketing messages, based on templates that included all required disclaimers and a process for getting compliance review for messages prior to distribution. His company, SLM Holdings, eventually sold the product to contact management software maker ACT.
The ban on social media may be starting to crumble, following last week's Morgan Stanley announcement that it will begin allowing participation on LinkedIn and Twitter, with management, monitoring, and archiving services provided by Socialware.
Still, Bishara said he is skeptical of products that solve the compliance problems of public social networks. "You really can't--not yet," he said in an interview. "The other social network sites never let you open up their APIs wide enough to let you ensure compliance."
A LinkedFA user can avoid those issues because the service is specifically built around the concerns of this industry. In a LinkedFA activity stream, members can comment on each other's status updates, but the comments aren't published right away. The author of the original post will see the comments grayed out in his activity stream until he or she approves them for publication.
How Enterprises Are Attacking the IT Security EnterpriseTo learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
2017 State of IT ReportIn today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.