For the financial advisers already communicating with customers on social media, last week’s big announcement from the SEC encourages them to take their social media engagement up a notch.
Finally ending the investigation surrounding Netflix CEO Reed Hastings and his use of Facebook to announce disclosed corporate information, the SEC decided not to pursue civil charges against Hastings. Even bigger, the Commission ruled that they appreciate the use of social media sites as a new form of market communication. Furthermore, the SEC ruled that as long as companies are clear to investors about their plans for social media, it supports those seeking new ways to communicate with shareholders.
This announcement is a huge leap for the financial services industry, and perhaps more so for the financial adviser incorporating social media into their practices, as well as a push for those reluctant to jump aboard the bandwagon. In a previous 2008 ruling, the SEC said only corporate homepages could be used for sensitive information announcements. Now, as long as they follow compliance protocol and reveal no information that would give one group of investors an unfair advantage, social media stands as a sufficient method of communication between advisers and clients.
What to Expect
So, what can we expect for the financial services industry now that the SEC has given its blessing for social media?
According to a FTI/LinkedIn study, seven in 10 financial advisers are already using social networks for business purposes. At the time of the study, adoption rates were expected to significantly grow since more than half of advisers expected social media to play a significant role in their 2013 marketing efforts. This represented an 80 percent increase year-over-year. That fact alone was huge, but now, with the social media doors officially opened by the SEC, how will this statistic change? Will those advisers concerned with social media compliance risks finally take the chance and include contemporary marketing communications into their practices?
So now comes the time when financial advisers need to make the big decisions. For those already active online, will you broaden your reach and build a stronger social media presence? And, for those who have yet to embrace social, what is your excuse for avoiding a communication channel that 5 million affluent investors are using to research their final decisions?
You may have heard the phrase “what would you do if you weren’t afraid?” Advisers need to ask themselves that question. With the new SEC ruling and the existence of archiving solutions that ensure social media compliance, the time to act is now. So I challenge you to not be afraid. Take a deep breath, do your research and take the social media plunge.
For the most recent SEC commentary on social media, see their April 2 and March 15, 2013 releases at: SEC Says Social Media OK for Company Announcements if Investors are Alerted (April 2); and SEC Issues Guidance Update on Social Media Filings by Investment Companies (March 15).
Editor’s note: This post originally appeared on the RegEd blog on April 3, 2013.