Last week, the SEC published new testimonial and social-media guidelines which clear the way for advisors to use social-media review sites such as Yelp and Angie's List. While the new guidance may seem like a big leap forward for financial advisors who use social media, there are still many restrictions. It's essential that you understand what you can and cannot do.
While I'm not a compliance expert, here is my understanding of the document. (I strongly recommend you consult your compliance officer or attorney prior to implementing any social-media campaign.)
1. If you control the reviews, you can't use them. If you have the ability to control the reviews on a site in any way, it is considered a testimonial and can't be used. But sites that show all reviews—both positive and negative—and do not enable you to delete or hide reviews (i.e., Yelp) are now acceptable.
2. If you show all reviews, you can promote it. The SEC guidance now allows you to publish reviews on your website, as long as all the reviews are published, not just a select few. If you decide to take advantage of this freedom, you should use a widget that automatically includes all the reviews. Otherwise, if there's a gap between when a review is written on a social-media site and when you update your website, you could be in violation of the testimonial rule. The widget will not necessarily show all reviews but will take you to the site where all reviews are found, so check with your compliance officer prior to using such a tool.
3. You can show your friends, fans and followers, as long as you don't imply a recommendation. You are now able to show on your website pictures of those people who follow your social-media profiles. This won't be considered a testimonial as long as you don't do anything that would make people think that the people shown are clients who are recommending you and your services.
4. You may be able to show ratings. It appears that you may advertise ratings of your business from these social-media sites, such as Yelp's five-star ratings. Just like reviews, these ratings have to reflect both the positive and negative and cannot be under your control in any way.
Good news, but still lots of questions. This new guidance is good news for firms that already have negative reviews posted about them on third-party social-media sites such as Yelp. Previously, the general consensus was that you could not claim a Yelp profile, so if someone had written a negative review, there was nothing you could do about it. Now, you can claim your profile and customize it to fit your brand and messaging—and hopefully attract some positive reviews to counteract any negative ones. By creating profiles on third-party social-media review sites, you can proactively build a good reputation instead of scrambling to defend yourself against a negative review.
