Content is the driving force behind social media, but it is also one of the reasons many financial advisors are still sitting on the sidelines as they try to figure out what they can and cannot post to social media sites.
In late 2011, the Investment Industry Regulatory Organization of Canada (IIROC) released guidelines which stated that all client communication via social media should follow the existing rules for advertising, sales literature and correspondence. Yet, almost two and a half years later, a majority of financial advisors continue to tread carefully when it comes to posting online.
Here’s what you need to know to stay compliant while posting.
Static vs. interactive content
Regulators have made clear distinctions between what is seen as static content vs interactive content (also known as dynamic content).
Static content is information that does not change on a regular basis. Many consider this information to be similar to that found on a business card, and can include such content as job titles, work summaries or Twitter bios. This content is usually considered an original template advertisement and therefore must be pre-approved by your compliance department.
Interactive content mainly consists of information found in real time discussions, such as posting a tweet on Twitter or sharing an update over LinkedIn. This information does not need to be pre-approved, according to IIROC’s guidance, but it must be supervised to ensure compliance with IIROC rules and securities legislation.
This type of content will generally be reviewed by compliance on an audit basis, says Paula Hewitt, head of legal for Dundee Goodman Private Wealth.
“For sites that use interactive content, training, templates and prudence are keys to success,” say Hewitt. “Remember, what you post online really is there forever. Even if you can remove it from the original site, the information will have been cached and many have been reposted or re-tweeted any number of times.”
Third party content
Care needs to be taken when posting links to third-party sites, because the content on those sites may change without the advisor’s knowledge.
Again, caution and common sense are key, says Hewitt. Posting a link to your firm’s website (which compliance approves) is fine, as is posting a link to an industry association. However, you may not want to post a link to an editorial or a discussion about an issuer, says Hewitt, because the content may change and put you offside with respect to your social media policy.
“I think the industry has some anxiety over third party content,” says Sean Shore, manager, business conduct compliance at National Bank Financial Ltd. “If an advisor is giving a proverbial thumbs up does that mean the advisor is seen as adopting that content?”
In a limited number of examinations of member dealers in 2013, IIROC found that some third party content appeared to be part of the products or services offered by a dealer member when in fact it was not. Posting a link to third party content could create a number of risks for both the firm and its registrants including reputation, litigation or regulatory risks.
Endorsements
According to IIROC’s guidelines, third party posts may be attributed to or considered an endorsement by your firm. For example, re-tweeting a client’s post or providing a ‘thumbs-up’ may be considered an endorsement. A good rule of thumb when deciding whether to endorse something is to determine whether the content is something that you would be entitled to post originally, says Hewitt.
Third parties who endorse you, recommend you or comment on what you’ve posted are beyond your control. As a result, Hewitt urges advisors to be careful about whom you are connected to on social media.
“In that regard, advisors should be selective about whom they link up with and what aspects of their online activity are visible to the public,” adds Hewitt. “Similarly, advisors need to be careful about whom they endorse or recommend and what they like or re-tweet.”
This is the third article in a three-part series on social media compliance.