While many advisory firms are avoiding using Facebook, LinkedIn and Twitter for marketing purposes until they receive more clarity from regulators on how to use these social media outlets, others are exposing themselves to possible regulatory actions, says Sheri Mushel, president and CEO of RIA Registrar.
As Mushel helps her RIA clients get ready for Securities and Exchange Commission (SEC) exams, which she says are on the rise, she reminds them that using Facebook, LinkedIn and Twitter is "considered advertising." RIA Registrar is a Minnesota-based consulting firm offering regulatory, compliance and registration support for advisors.
One particular issue for advisors using LinkedIn, she says, is that they may inadvertently get testimonials from other people, which counts as advertising. This, she says, could get a firm dinged. To remedy this problem, Mushel suggests advisors "uncheck" the box showing referrals on LinkedIn so testimonials don't show up.
Another challenge in using social media sites like Facebook when it comes to SEC exams is retention of files. How does one retain files with ever-changing Facebook pages and posts?, she asks. More and more companies are popping up offering Facebook retention services, Mushel says. "Some [larger] firms are dipping their toes in the [social media] water," she says, but "other firms with five or six people are saying, 'We are going to wait until there are clear guidelines.'"
(Among those larger firms: Morgan Stanley, which has given 600 brokers access to Twitter and LinkedIn to begin; Raymond James, which announced its new policy at its annual conference; and independent BD Commonwealth Financial.)
