Jason Bishara could be on his way to solving one of the biggest beefs the financial services community has when it comes to mixing online social media with business: the messy compliance issues that can arise when advisors get into free-ranging online chats with clients.

Of course, just telling advisors not to use social media isn’t likely to work over the long term. As Bishara says, trying to keep social media off limits to advisors is reminiscent of the financial services industry’s initial resistance to email — it just won’t stick. According to Bishara, his new social media site for advi-sors, LinkedFA, solves the compliance issue while still allowing advisors to participate in the newest wave of technology to dominate Web-based communication.

The mechanics of Bishara’s self-described “solution” are relatively simple: essentially, all communications are kept on file. As a result, Bishara says, the compliance roadblock has been moved to the curb for advisors who want to use social media for business purposes. “The firms know they can’t stop [social media], so they will have to regulate it,” Bishara says. “LinkedFA provides them with the platform to do that.”

So far, initial response to the site, launched in January and owned by Bishara’s Coral Springs, Fla.-based firm MY FA Network Inc., has been positive. Since LinkedFA launched, independent U.S. shops have been the first ones to sign up, which is the market Bishara is mainly targeting. “The larger firms have yet to endorse any product,” says Bishara, “but are just dipping their toes in.”

LinkedFA will also be rolling out in Britain and Canada within the next three months, when it opens offices in these locations. “We need relationships in these countries, to customize the application to be country-specific,” Bishara says. “While the industry is the same, each country has its own lingo and regulations.”

Although Canadian regulators have not endorsed a specific technology to address compliance issues, LinkedFA sounds like a good idea, says Sandy Jakab, director of capital markets regulation at the B.C. Securities Commission: “We expect firms to find a way to access what their employees are doing with respect to social media.”

Ultimately, all firms are responsible for coming up with a policy to address the use of social media, says Jakab, whether they are letting advisors use it or not.

Social media, of course, is all about casual communication — not something regulators are generally comfortable with. Megasites such as Palo Alto, Calif.-based Face-book Inc.’s Facebook, San Francisco, Calif.-based Twitter Inc.’s Twitter and Mountain View, Calif.-based LinkedIn Corp.’s LinkedIn have taken off precisely because they facilitate rapid connection, equally rapid disconnection, privacy “walls” and other features that can make it easy to operate out of sight of peers, employers, compliance departments and regulators.

All these groups, however — especially regulators — want to know what advisors are up to. That generally means treating advisor communications via social media in the same way as email. Everything must be recorded and monitored.

The problem compliance officers face is that precise monitoring of this type is virtually impossible on most social media sites. For instance, an investment advisor could be touting the latest junk stock to his or her clients on a Facebook account, one that compliance officers at the firm cannot access. Once those messages are deleted, there is also no way to trace or retrieve them.





@page_break@Compliance isn’t the only issue, either. Many advisors are concerned about competitive issues, such as “poaching” — that is, competing advisors could log onto an advisor’s site and view that advi-sor’s network, including contact information for clients.

So, while social media sites are being touted as the latest way that businesses can build on existing client relationships, as well as building new ones, the financial services community has, for the most part, balked at this idea. Most companies have dealt with the issue by either creating a rigid social media policy or simply banning their advisors from using these sites altogether. Still others, apparently at sea, have avoided it entirely.

But Bishara is hoping the arrival of LinkedFA will change all that. In line with U.S. Financial Industry Regulatory Authority regulations, the reporting feature on the site records and stores all communications and content between advisors and investors for at least six years. Any attempt to delete this material will be blocked.

Perhaps almost as attractive, for advisors, LinkedFA also has a compliance guarantee. If LinkedFA fails to provide a user of its site with a copy of his or her electronic communications, the company will pay any fine levied by FINRA for a record-keeping violation.

The main goal of LinkedFA, Bishara says, is to help advisors enhance the client relationships they already have, not to add contacts simply for the sake of it. “The average advisor has 270 clients,” he says. “If you do the math on that, in the hours of the day, it’s impossible to communicate with them all on a regular basis.”

Bishara says the LinkedFA system makes keeping in touch easier by reversing the usual flow of information between client and advi-sor. Instead of the advisor acting as the “hub” at the centre of the client network, clients will be able to initiate contact more easily. “Clients will come to [the advisor’s profile] for the information they need,” Bishara says. “That makes it easier to reach all those people.”

The idea of blending technology and financial services is nothing new to Bishara. Having started out in the industry as a financial advi-sor, Bishara began experimenting with building his own Web-based contact-management system while acting as a managing director for New York-based Global Capital Markets Corp. in 1999. In overseeing 800 advisors, Bishara noticed that his employees needed a better way to keep track of their clients.

Global Capital, however, did not want to spend the money to create the sort of customized contact system that Bishara envisioned. Using his own capital, Bishara developed a Web-based contact-management system called the Brokers e-Vantage. Bishara then left Global Capital to start his own independent practice, Melville, N.Y.-based J.P. Turner & Co. LLC, whose advi-sors would use his software exclusively. After watching the product grow in popularity among advisors in-house, Bishara decided to take his system public. He opened up Miami-based SLM Holdings Inc. in 2000 and sold Brokers e-Vantage. Bishara ran J.P. Turner & Co. as vice president until 2005, while simultaneously sitting as the executive chairman on SLM Holdings’ board.

While chairing SLM Holdings, Bishara started formulating the idea for LinkedFA in 2006. As he watched the popularity of MySpace take off within the music community, with users sharing songs with each other, he wondered if advi-sors could do the same. “I thought, ‘How can we use MySpace, adhering to the electronic correspondence rules and regulations?’”

Using Facebook and LinkedIn as his models, Bishara began to develop LinkedFA. Like LinkedIn, LinkedFA plans to generate its revenue through advertising and premium messaging services. Over the past three years, Bishara has also been in constant communication with FINRA and the large brokerage houses to learn how to fine tune the product to resolve compliance issues. IE