People are very good at finding reasons not to do something (or at least delay doing something) that they know they really should. Whether it’s dieting, taking exercise or revising for exams, we can always find an excuse for putting it off.
I see it all the time in my work with financial advisers and other professional services companies in relation to social marketing. Firms know it makes sense, that the internet is where their clients and prospective clients are and that, over time, a carefully managed strategy will pay dividends. But whether, for example, it’s the cost or the time involved, there’s always a reason not to get on with it.
Another excuse that advisory firms often use is that they’re concerned about compliance. They’re worried, especially if they're working with external providers, that they might land themselves in trouble with the regulator and perhaps face a hefty fine. Understandable though such concerns are, they shouldn’t stop you using social media and reaping the rewards on offer to firms that do it well.
Compliance is, of course, very important. The rules and regulations are there to protect consumers. Firms that are professionally run and that genuinely have the best interests of their clients at heart have no reason to fear them.
Financial regulators in different countries have provided varying degrees of guidance on the use of social media. The UK’s Financial Conduct Authority (FCA) produced a 20-page document for advisers in March last year. Its US counterpart the Securities and Exchange Commission (SEC) produced the Risk Alert on Adviser Use of Social Media in 2012, which is helpful and well worth reading.
In the case of both the UK and the US, much of the advice provided is, frankly, common sense. To quote the FCA guidance:
"It remains a fundamental requirement that all communications are clear, fair and not misleading. Promotions that fail to be (so) can pose a risk as they could lead consumers to buy the wrong product – ultimately with unhappy outcomes for them and for firms."
Perhaps unsurprisingly, the FCA and the SEC have different points of emphasis. UK advisers, for example, are reminded that “there are requirements to include risk warnings or other statements in promotions for certain products/ services”. This, the FCA acknowledges, poses a particular challenge given the character-limited nature of social media. It suggests, as a solution, including the appropriate wording in an accompanying graphic or article.
On the other hand, the SEC places particular emphasis on third-party content, including testimonials. Indeed, it issued updated guidance on this issue in 2014 (Links to all the guidance mentioned are at the end of the post).
There are, however, two fundamental points that the FCA and SEC broadly agree on.
The importance of monitoring and approving content before it goes out. Firms need to have systems in place ensure that every communication is checked by at least one other pair of eyes.
Advisers in both the UK and the US have a legal requirement to keep a record of social media communications. Every firm should have a detailed log of every post that goes out — including those that are subsequently deleted for any reason.
My own suggestion is that financial companies use a dedicated social media risk management and compliance platform. There are several available, though I can particularly recommend CrowdControlHQ, based in Birmingham, a solution that we are starting to use with our own financial clients.
Please note that I am not a lawyer. This article is in no way a substitute for reading the relevant guidance in your particular country and ensuring that everyone involved in your social marketing fully understands their responsibilities.
But nor should compliance concerns be seen as a reason not to be on social media. Consumers want and need financial information that’s transparent, accurate and genuinely useful — and there’s real commercial advantage to be had for firms that are willing and able to provide it.