Social media compliance is a lot like green eggs and ham, says April Rudin, founder and president of The Rudin Group, a social media consultant in New Jersey: “It sounds scary, but if you try it, you will probably like it,” says Rudin. “There is no need for advisors to get freaked out.”

Much of the angst among advisors with social media originated from the lack of guidance they were receiving from regulators, says Rudin. However, the Investment Industry Regulatory Organization of Canada (IIROC) has provided guidance indicating that social media usage essentially falls under the existing rules for advertising, sales literature and correspondence. The Mutual Fund Dealers Association of Canada (MFDA) is currently in the process of drafting its own set of guidance.

“The rules haven’t changed,” says Rudin. “The rules are the same whether you are on a social media platform, a billboard or a TV show. They are the same rules they have offline that they have online.”

Sara Gilbert, business consultant and founder of Strategist Business Development in Montreal, agrees that advisors don’t need to get bogged down with compliance.

“I have one general rule of thumb for advisors when it comes to compliance,” says Gilbert. “If you wouldn’t stand up at a client event and say it out loud in front of all your clients, then don’t say it on a social media platform.”

Compliance doesn’t have to mean avoidance for advisors. Today more than 8 million people are members of LinkedIn in Canada alone, and 40% of those users have household income of $100,000 or more. That demonstrates the significant prospecting opportunities that social media can present for advisors, says Brian Tietje, vice president of sales at social media software company RockTech in New York.

Before jumping feet first on to a social media platform, advisors will need to consider the following:

Is social media right for your business?

Social media is a huge commitment and may not be the right fit for everyone, says Tietje.

“You have to decide for your practice whether it makes sense to start a social media strategy or not, ” says Tietje. “If you are going to set up a profile and then not monitor it, this will be worse than not being on there at all.”

Decide on a platform

You want to position yourself on the social media platform that is used by a majority of your clients, centres of influence and prospects. Although LinkedIn is the most popular platform in the business world, that doesn’t necessarily mean your clients will be on there as well.

“If you service a large percentage of people from the entertainment business, then you will want to be setting up a Twitter account as they are extremely active on this platform,” says Gilbert.

Before getting started, check with your compliance department to determine which social media platforms have been approved for use at your firm. Many financial institutions restrict advisors from using platforms such as Facebook, Pinterest and YouTube for business purposes. However, other firms are much more lenient.

Do you have a social media policy?

IIROC states that firms must be prepared to monitor advisors’ social media activity fully, as well as archive and store all communications that are conducted on social networking sites. Many financial institutions have implemented social media policies or included them as a section within their compliance manuals, detailing their approach in this area.

Before setting up a social media account, advisors should contact their compliance officer or branch manager directly to see if they can obtain a copy of the social media policy. These policies will inform advisors of which platforms they are permitted to use, as well as what type of content has to be pre-approved and how online communications will be archived.

“Firms are no longer just saying no,” says Sean Shore, manager of business conduct compliance at National Bank Financial Ltd. “We want to try and show the advisor what they can do within the parameters that have been provided in the policy.”

This is the first article in a three-part series on social media compliance.

Next: The components of a social media policy.