Tags: Marketing

It is no secret that communication practices have changed in myriad ways over the last couple of decades. The emergence of email was perhaps the earliest example of this revolution, but it is no doubt the only way customer communications have changed in the financial planning and wealth management industries.

These days, financial planning customers have come to expect instant responses from their advisors and wealth managers. Modern clients are no longer content to wait for days, or even hours - they want answers, and they want them now.

The expectation of instant access and instant answers has spilled over into the financial planning and wealth management industries, no doubt affected by everything from the switch to online shopping to the instant streaming of movies and TV shows. If you want your practice to be successful in the 21st century, you need to embrace new media and new forms of communication.

Many individual financial advisors and owners of financial planning and wealth management practices have responded to this need for instant communication in a big way. By embracing social media and other modern forms of communication, those companies have reached out to their customers in new ways. But are those social media efforts doing more harm than good, and how can the owners of individual practices stay compliant with FINRA regulations while providing clients with the instant answers they are demanding?

One potential answer to this social media dilemma lies in financial technology. The smart use of FinTech allows practice owners to stay compliant with FINRA regulations by using services like RedEd. Practice owners can also use services like Truelytics to optimize their practices and analyze the way they do business, and services like WealthBox to communicate with their customers and provide better and more complete service.

In addition to the strategic use of financial technology, financial industry professionals can also embrace best practices to make sure their social media policies and outreach efforts are fully compliant with all applicable FiNRA regulations. These five best practices can help your practice stay compliant even as you embrace social media and focus on the needs and demands of your customers.

#1. Embrace Risk Management

Experienced practice owners and financial professionals understand the value of limiting risk more than most. They advise their clients to reduce risk in their portfolios as they get closer to retirement, and they use strategic rebalancing to reduce risk and boost returns.

That same approach to risk management applies to social media policy as well, and it is something practice owners should embrace. It is important for practice owners and individual financial advisors to develop and implement risk management programs for their social media communications.

That risk management program should include appropriate reporting to the senior management team or the board of directors, and it should allow those decision makers to evaluate the effectiveness of the social media program. By tackling risk head-on, this strategy allows practice owners to take advantage of social media without putting an undue strain on the overall health of the company.

#2. Create a Detailed Social Media Policy

No matter how your practice plans to handle social media, it is important to have an overarching policy in place. That policy should cover all aspects of social media communication, from which team members are authorized to update the company Facebook page and send out tweets to the allowable timeframes for responding to customer inquiries and client complaints.

The social media policy should also dictate that all online properties, from the official Facebook page and Twitter feed to company blogs and websites, be properly branded. Clients should be able to identify the company at a glance, and all accounts should be held in the name of the practice.

Furthermore, the social media policy should include detailed guidelines for usage, along with strong content standards. Password protection should be addressed in the policy as well, with a strong emphasis on keeping the company safe from hackers and account hijackers.

#3. Establish Supervision Requirements

No matter who is responsible for updating the company Facebook page, responding to incoming tweets and performing other social media actions, it is important that all communication complies with FINRA regulations. That is why proper supervision is such an important best practice.

That supervision can take some different forms, including a requirement that registered principals review and approves all static communications before use. Monitoring requirements could also mean that registered principals supervise client communications through interactive forums like Twitter and Facebook posts.

#4. Retention of Records

The retention of records is another area where social media policy could potentially run afoul of FINRA and SEC regulations. The recordkeeping requirements of FINRA are quite strict, and it is important for practice owners to fully understand, and comply with, all applicable regulations.

When implementing or updating any social media policy, it is important for practice owners to fully understand the recordkeeping requirements FINRA has implemented. Specifically, FINRA regulations require that practice owners preserve all social media records for not less than three years. FINRA further requires that the first two years worth of social media records must be kept in an easily accessible place.

#5. Education and Training

Training and education are always critical areas for the owners of financial planning and wealth management practices, and that applies to social media policy as well. It is not enough to train your existing staff in the specifics of the social media policy; to remain compliant with FINRA regulations, you must train all incoming employees as well.

Ongoing education and training regarding social media policy are another vital best practice, and one practice owners should fully embrace. It is easy for existing employees to forget about the requirements of their social media communications, or for new employees to fall through the training cracks.

Creating a social media policy manual and making sure every new employee has a copy of it is a good place to start. Practice owners should also establish regular training sessions for new workers, and those training sessions should include information on established social media practices and how they are to be implemented.

Social media has made our lives easier in many different ways, but the new ways of communicating have also created challenges for the owners of financial planning and wealth management practices. Staying compliant with FINRA and SEC regulations is not always an easy thing to do, but following the best practices outlined above is certainly a good start.

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Disclaimer

The above article is meant for information purposes only and is not intended in any way to provide legal or other advice for any specific situation.  Readers always should consult their own tax, accounting and legal advisors before taking any action related to the above article or subject matter.

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