SEC & Social Media Guidelines for Financial Advisors

Written By : Clifford Blodgett

SEC Social Media Guidance Update: What Should Advisors Do Now?

Unless you’ve been living in a cave for the past few years, you’re probably aware of the importance social media plays in a successful marketing strategy. You’re probably also aware of the challenges social media platforms present to the Securities and Exchange Commission (SEC), as well as to your own compliance department.

In an effort to clarify your questions amidst the ever-evolving landscape of social media, the SEC recently released a Social Media Guidance Update, http://www.sec.gov/investment/im-guidance-2014-04.pdf. The update includes a few important changes to the way you should be using social media.

In particular, the following areas have been impacted:

Third-Party Reviews

As you know, client testimonials have been on the SEC’s naughty list for a long time. Now, with the proliferation of third-party review websites, the SEC has reviewed and somewhat relaxed its stance on the issue. You can indeed utilize third-party reviews in your advertising, so long as you have no control over the commentary posted and the website in question allows users to view both positive and negative reviews. This means sites like Yelp, Google, and other independent review sites are allowed, while comments on your personal Facebook or LinkedIn page are not.

What you should do: Provide your audience with a link to reviews about you on Yelp, Google, and so on. You’re allowed to do so as long as you link to the main page concerning your services, and not to a specific positive review you want them to read.

Personal Testimonials on Other Subjects

The SEC has long frowned upon testimonials which promote your personal character, such as those which promote your community activities, charitable causes, personal interests, and so on. However, these guidelines have now been relaxed, so long as the testimonials do not relate to your expertise as a financial advisor.

What you should do: Jump on this opportunity to connect with your clients on a deeper level! Most people would rather do business with someone they like and can rely on, rather than a complete stranger. Including this information on your social media profiles can become a powerful tool for attracting new clients and retaining older ones. Just remember: you cannot endorse your financial skills whatsoever. Stick to information on your community involvement and personal interests.

Promoting Your Social Media Profile

In the most recent guidance update, the SEC clarifies the rules on self-promotion via social media. Sending out friend or connection requests does not violate rules on testimonials or endorsements. In addition, you are allowed to mention your social media profile in other settings. You should not reference particular reviews or testimonials.

What you should do: Whether you’re sending out emails, giving an interview on the radio, or speaking at a conference, direct your audience to connect with you on Facebook, LinkedIn, and Twitter. Do not direct them to read or listen to specific reviews or testimonials. Keep it simple and general, such as, “Learn more by following me on Twitter”.

The SEC’s new, relaxed guidelines lend us more freedom, but with that freedom comes responsibility. As always, check with your compliance department before utilizing new social media strategies. Be smart about your tactics, and you can safely take advantage of these new opportunities to grow your clientele.

FOR INSURANCE PROFESSIONAL USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC 14207 – 2015/3/5

Filed under: Financial Advisor Marketing, Social Media for Financial Advisors