Some of the topics discussed were:

- Implications and questions of FINRA Notice 10-06 for financial advisors.

- Whether or not financial advisors will get value out of social networks.

- How you should treat personal vs. professional data while on these social networks (check back soon for a detailed blog post on this topic).

- Whether this new channel will overload the compliance department.

- Why firms and advisors are having a hard time understanding the compliance issues.

- Why firms are racing to adopt social media.

- Whether or not these are just tools for the younger generation.

- Best practices for advisors to get the most out of their social media investment.

- How long it takes to get a program up and running so advisors can start leveraging these sites.

I hope you enjoy the discussion and I look forward to seeing you at the CFDD conference in October.

• “We aren’t allowed to use social networks but we can use LinkedIn”
• “Our firm allows us to use LinkedIn but the activity isn’t monitored”
• “LinkedIn doesn’t fall under Notice 10-06”
• “We prohibit use, and our employees follow that policy”

For those of you following the social media trends in this sector you will recognize right away the risk caused by the beliefs above. Before going any further let me make a few things clear. LinkedIn is a social network. More importantly, LinkedIn is absolutely governed by Notice 10-06. And last, firms that allow the use of LinkedIn without the appropriate policies and oversight are guaranteed to get fined by FINRA at some point soon.

Just look at a recent study by Ledermark. They found “more than 40% of professionals under 50 said a social media presence has led to doing business. They prefer LinkedIn for business and Facebook for personal use; however, both social networks allow them to be more visible, have a platform for questions and answers, and reconnect with old friends, introductions and referrals — all cited as how social media helped bring in business.”

If you think your reps aren’t using LinkedIn do a quick search to find out.  Just enter your company name and see how many profiles show up.

Now onto the assessment. To complete the assessment simply answer yes or no to each question below. Give yourself one point if you answer NO and zero points if you answer YES. Your level of compliance risk will be described below. Let’s get started:

1. Do you prohibit registered reps from using LinkedIn?
2. Is this practice defined in a social media policy?
3. Have you completed spot audits to ensure they are following the policy?
4. Are you pre-approving their profile content before it is posted?
5. Are you completing spot audits to ensure the content hasn’t changed?
6. Are you preventing reps from displaying recommendations on their profiles?
7. Are you archiving the content posted to and created on LinkedIn?
8. Are you supervising the content posted to LinkedIn after the fact?
9. Are you preventing reps from rating answers provided by other members of LinkedIn?
10. Are you preventing reps from emailing more than 25 connections via LinkedIn Mail?

Now tally up your score and match that to the table below.

Score = 0: Good news, you aren’t at risk but you likely aren’t getting any of the benefit of LinkedIn either because you are in total lockdown.
Score = 1-5: You are probably handling compliance in a highly manual fashion. Not only is this costly but it is also error prone.
Score = 6-10: You are at high risk for a fine from FINRA. Quickly find an automated way to manage site access, content archiving, supervision and discovery.

If you are concerned and need some more information here are a few resources that can help:

• Companion Guide to FINRA/SEC Social Networking Compliance
• Social Networking Compliance Webinar
• Summary blog post from the FINRA webinar discussing Notice 10-06

Some of you reading this may wonder, what does email archiving have to do with social media? As it happens quite a lot. Email (and IM) archiving is nothing new. Regulated firms have been capturing, retaining and supervising email communications for the last 7-10 years. With the advent of social media and it’s growing importance in the financial industry, FINRA, the largest independent regulator for all securities firms doing business in the United States recently clarified it’s policies on the compliant use of sites like Facebook, LinkedIn and Twitter.

Notice 10-06 is giving firms the confidence to move forward with their social media plans but it also clearly dictates the need to define a social media policy, have a way to automate it and most importantly archive & supervise the activity.  While Socialware is a leader in social media policy automation and archiving we do not play in the email archiving space.

Why is the distinction important? Because, inevitably all of our customers want the same thing – an integrated solution to “messaging compliance.” This need will only accelerate with time as participation and the inevitable business use of sites like Twitter, LinkedIn and Facebook grows. The added benefit of managing policy and compliance from a single solution is that firms with established systems can adopt social media in a compliant fashion without having to create new business processes to manage the content and supervision on the backend.

Now, thanks to this partnership, if you are a Smarsh customer you can single-source an integrated solution to email, IM and social media archiving and compliance. If you are interested in learning more we encourage you to reach out to your Smarsh representative today.

1. Gartner Names Socialware Cool Vendor in Cloud Security Services for 2010 http://bit.ly/dqA2lB
2. RT @enterprises: Social media compliance extends beyond archiving http://bit.ly/9RS7jd
3. Advisor Spotlight: learn how one advisor is successfully using social media http://bit.ly/bqTGRu
4. Twitter 101 – A guide for businesses, awesome stuff http://bit.ly/HIMdO
5. Why You Should Advertise on Twitter http://adage.com/u/npAaRa
6. RobertHalfTech New Survey: Many CIOs Establish Stricter Social Networking Policies http://bit.ly/cJcEfy
7. 10 ways to use LinkedIn for business: http://bit.ly/chw5BE
8. Investment News: Making the most of social networking http://bit.ly/agQsMe

“Our new collaboration cloud is the latest SaaS-based app to enable new levels of engagement, uncovering real-time influencers that gets translated into a listening grid so you can better automate outreach, nurture leads and convert high-value traffic.”

While this is all completely made up you are probably trying to think where you heard about this product. Unfortunately, marketers get sucked into the latest buzzwords (me included) and before long you can’t make heads or tails of what it is they are trying to communicate.

Since the launch of the new site last week I’ve gotten a lot of questions. Like, did you finally get some sleep? A: No (I have a 4 month old at home). Who designed the site? A: We have a very talented designer who did all the work on the site and product. And finally what is the difference between Socialware Sync and Socialware Compass? This last one came up the most so I’m going to take my own recommendation and try to shed some light on the topic.

When it comes to Socialware Sync think of it as your social networking insurance policy – similar to wearing a helmet when out on a bike ride. Whatever example you prefer, the underlying principle is the same. We all make decisions and investments every day to reduce our risk and give us greater peace of mind. Sync does this for anyone with a Facebook, Twitter or LinkedIn account. There are so many things that can go wrong. Your account can get hacked. Regulators, like FINRA, SEC, FSA, FDA, IIROC, can require you produce electronic records. Or a citizen can make a record’s request to a government agency and compel you to produce an old social media message.

Without a backup of your social activity and an easy way to search across it, you could be looking at fines, litigation or at a minimum emotional stress if your content ever gets lost. So if you are looking for peace of mind to ensure you comply with regulators, want to ensure you never lose your record of social interactions or just want a simple way to search across your entire social archive, then Socialware Sync is your answer.

Now let’s shift gears and talk about how companies enable social networking use. To date companies will start by creating a policy, some will train employees on how to use these tools and then they open the floodgates and hope that the directions are followed. This is similar to someone starting a trip with an old paper map. They plot their course and head out on the journey. Periodically they make some wrong turns but usually get back on track. Often you will run into a stretch of construction that you didn’t know about and then in the hope of making up time you go past a speed trap and are staring at a $200 dollar ticket and 6 hours of drivers education classes.  When the trip is over you have no idea how long it took you, exactly which way you went (thanks to those wrong turns) and of course this experience will be repeated on the way back home with one change – you will be driving the speed limit.

Now compare this to a GPS system. You search for your address and quickly tell the system to calculate directions. You can tell it if you want the shortest distance, shortest time, least use of freeways and more. As you start out on your trip you get notified of changes in real-time like traffic, speed traps or construction. If you need to make an unplanned stop the unit will re-route you and give you all the guidance you need to get to your destination quickly, safely and on your terms. When you finally arrive you know exactly how far you traveled, how long you were driving and the route you took.

Socialware Compass is like a GPS unit for companies that want to help employees navigate the social networking superhighway. Most companies, especially those in regulated industries, have a policy of which features can be used, which topics to avoid and who needs to review any content that is in question.  Socialware Compass does all of this and more. It automates a social media policy providing real-time guidance for any employee using sites like Facebook, LinkedIn and Twitter. Employees don’t need to worry about where they “might” violate policy; the system will guide them the entire way. In addition, it archives everything so enterprises can comply with industry or federal regulations and analyze usage across the business.  And best of all, it is as easy to use as a GPS unit – you setup the policies (where you want to go and how you want to get there) and let the system guide you along the way.

I hope this helps shed some light on how the two solutions compare and helps you decide which one would best suit your needs.  If you are looking for more information there are videos, tours and a wealth of other resources on each site (Compass, Sync). In addition, you can sign-up for a free 30-day trial of Sync to give it a test drive.

Here are 25 reasons I came up with, plus a bonus reason in case 25 isn’t enough to convince you to start archiving today.

You should back up your social activity because…

1. Accounts can get hacked or hijacked
2. You should always have access to your data 24×7
3. It’s too hard to search for tweets or status updates
4. You shouldn’t limit yourself to Twitter’s 3,200 tweet caps
5. One day you are going to say “back in my day I tweeted about…”
6. It’s required to comply with FINRA/SEC guidelines
7. Repurposing your posts for SEO purposes is a great way to get more value from your social activity
8. Bad things happen to good data
9. Adding an integrated feed of your posts to your website further increases engagement
10. Murphy’s Law states that the fail-whale will show up the exact time you need a Tweet from Twitter.
11. It is required to comply with the Freedom of Information Act guidelines
12. Discovery fees are expensive if you don’t have a reliable archive
13. Your social networking passwords are probably not as strong as they should be
14. You will wish you had a historical record of your social activity
15. It can be used as a monitoring tool to tip you off to odd behavior
16. It’s your social autobiography
17. You never want to lose a valuable thought or idea
18. It is too hard to repurpose content for blog posts without it
19. You don’t want to limit yourself to the last 30 days of Facebook activity
20. Losing a twitter DM again sucks and can be costly
21. It may be required to comply with your corporate social media guidelines
22. Screenshots simply don’t work
23. When government agencies get a records request they can’t tell people to just “go to Twitter”
24. You have insurance for everything else, why not your social activity
25. It’s your data and you should have control

And finally bonus reason #25½…Because time machines are cool (even if this one just takes you back in time)

I’m sure I forgot to mention some other good ideas. Please add yours below in the comments section and after that head over to Sync and give it a 30-day free test drive.

“This program addresses implementation of new guidance that FINRA recently issued in Regulatory Notice 10-06, concerning social media. FINRA staff and industry practitioners offer practical guidance on how to monitor and supervise social networking sites.”

Once again if you participated in last month’s webinar (here is a full summary of that session), read Notice 10-06 or downloaded our Companion Guide to FINRA/SEC Social Networking Compliance, you didn’t miss too much. The participants asked a number of questions to help further clarify a few issues. In addition, panelist like Joanne Rodgers, a Vice President of Compliance at New York Life, shared her recent experiences around their social networking compliance pilot.

Without further ado here are all of my live tweets that I posted during the session. If you are going to scan the posts (there are over 70) be sure to pay attention to the bolded ones. There are some great nuggets here. You can also check out other references to the hastag #FINRASN which tracks social networking posts related to FINRA.

As always, feel free to follow me on Twitter and send me any questions you have.

• Panelists include: Doug Preston, Senior VP and Compliance exec from BofA/Merrill Lynch
• Joanne Rodgers, VP of Compliance at New York Life and Joe Savage,  VP in FINRA’s Investment Companies Regulation Department
• Notice 10-06 was designed to cover business use of social media, addresses 5 key topic areas
• Recordkeeping: firms must keep records of participation or use in social media (same as email or IM)
• Recordkeeping: may not be easy to capture this content, aware of vendors (like Socialware) that can automate this
• Q: acceptable formats for social media archiving? Some firms filing tweets to FINRA, PDF’s have been submitted to date
• Suitability: Must be careful of recommendations on social media, refer to existing guidance for this matter
• Suitability: be careful not to mention specific funds or securities, firms should have a policy to address this
• Types of forums: content posted on site generally treated as advertisement, must be pre-approved
• However, interactive content is not required to be pre-approved. Blog posts are generally ads, adding comments makes it interactive
• Wall posts on Twitter or Facebook are interactive and do not require pre-approval
• Supervision: social media must be supervised, either in a pre-approval or post-approval method, use appropriate risk based methods
• 3rd party posts: firms may be responsible if they become entangled or endorse the post of a 3rd party
• Q: Is the Notice considered a rule? No. It is simply additional guidance. It may lead to new rule making around advertisements
• Q: Can you violate a Notice? No. You have to violate a rule but this guidance is still important
• Q: Can you selectively remove 3rd party comments and leave others? Does that imply an endorsement? No.
• Moving to panelists from the firms. Let’s discuss the different types of social media and is it right for you?
• Doug – social media includes wiki, forums, Facebook, LinkedIn, Twitter, YouTube, document sharing, social spaces (2nd Life)
• Doug – a website that only posts information is not a social space, it must be designed to share content between users
• Doug – Facebook has 400mm users, LinkedIn has 60mm, there are 50mm tweets each day, MySpace has 300K new sign-ups each day
• Doug - if access is permitted the activity must be retained and monitored by the firm, conduct ongoing analysis of the tools
• Joanne – we had to consider the size and structure of our firm, many agents are decentralized, manual process wouldn’t work
• Joanne – doing a pilot to help us automatically comply with the regulations, field force & recruiters anxious to get involved
• Joanne – looking at developing best practices and field templates, but agents will want their own touch, must be personalized
• Q: are their growth opportunities through social media? No hard data yet, a lot of calls to arm from sales, responding in kind
• Joanne – we believe there is consumer expectation but also need to be careful that we don’t cross the line
• Joanne – see opportunity for lead generation for new business and for recruiting new agents, LinkedIn ideal
• Joanne – we had success recruiting new agents as part of our pilot
• Joanne – we put together guidelines and best practices as part of our pilot, provided a series of templates as well
• Recruiters need to be careful about what they are posting as well
• Competitive pressures? Joanne – Yes we hear it on a daily basis. We factor it in but it is not the driving force.
• Doug – I agree. Sales force will want it, still in its infancy from a sales standpoint, commercialization will happen quickly
• 48 asset management firms surveyed – 2/3rd said they don’t have budget for social media plans
• Doug – we go through a pilot process, based around business objectives, long process, lot of controls, doing a # of these now in SN
• Q: is internal training content on a wiki subject to recordkeeping rules. Yes absolutely.
• Joanne – tell us about your pilot process. Vendor selection – key was records retention, biggest challenge for compliance
• Joanne – also wanted a vendor that could control access to individual site features. Pilot for 25 agents and 25 recruiters
• Joanne – noticed most agents participated on Facebook, saw a lot of activity on LinkedIn from recruiters
• Joanne – going through final stages of evaluating pilot, looking at how our agents are using the tools, good success stories
• Joanne – recruiters were successful, need to provide agents more tools on how to navigate this space, success on agent side as well
• Doug – on banking side have rolled out a number of social networking tools, associates like it, use it, need more controls
• Doug – been doing this for a couple of years on the banking side, rolling out pilot on the securities side
• Joanne – staffing implications? still an unknown, impact to sales material review unit, impact to email monitoring group
• Joanne – pilot was limited to 50 people, hard to judge scale at this point, have to keep an open mind and be flexible
• Doug – I would echo those remarks. Training helps and is always the key when rolling these things out
• Joanne – who is the vendor? We cannot disclose it at this point.
• Joanne – need to complete technological due diligence, retain and retrieve records, ability to integrate with email systems
• Joanne – our vendor allows us to block certain functionality on the social networks (i.e., block posting videos)
  
• External use tools hosted outside the organization (Twitter, Facebook) present a greater risk, work activity takes place everywhere
• Doug – develop policies to address social media use, provide guidance on usage (developing handbook), inform on regulations
• Doug – use tools to supervise, block activity when prudent and monitor as appropriate, ensure we can retain & supervise
• Doug – provide initial and ongoing training, developed process for social media issues, built in escalation process across org
• Joanne – FINRA should be proud, ahead of the curve. Happy to see guidance, haven’t seen same movement on insurance side
• Joanne – hoping to see them follow FINRA’s guidance.
• Joanne – what about brand risk? Always viewed agents as ambassadors, have to provide guidance and formalize a process
• Doug – compliance is the guardian of reputation risk and protects us in that regard
• FINRA will look for written supervisory procedures addressing how you supervise social media, that you testing, audit, etc
• Joanne – established a social media working group to figure out whether content is interactive or static, have to give guidelines
• Doug – policies are ever changing, must adapt as we learn, the definition of static vs interactive is tricky, training is key
• Q: firms that allow LinkedIn profiles how are recommendations monitored? Joanne – our vendor can block this
  
• Joanne – when a recommendation is given you need to approve, if you can’t block build it into your procedures, audit on backend
• Who can use social media? Joanne – Consider the compliance history of each rep before opening flood gates, training requirements
• Doug – I agree, certain tools will be more applicable for certain individuals and departments
• Training task – always a never ending process, need to keep abreast of innovations in the industry – this is a challenge
• Doug – we have a great training organization, bedrock to moving out any new technology
• Static vs. Interactive content will be a tough area – gray area in middle.
• 3rd party posts: only responsible if you adopt or entangle firm in post
• What about disclaimers? Firms may consider this, part of facts and circumstances of a situation
• What about monitoring? Firms that allow typically have some level of monitoring to protect against inappropriate content
• May be complaints that come in, firms need to keep an eye out for those to ensure compliance
• Entanglement: firm puts up a posting, 3rd party reads, calls you, comments on it and then you get involved in an answer
• Blog post, 3rd party responds, you forward and comment that you agree (you are then adopting it)
• Joanne – NYL does not have a blog, we do have social media monitoring services, directed towards Corp. Comm.
• Joanne – our vendor can block favoriting or liking a post to protect us against inadvertent endorsement should have in-motion monitoring for posts
  
• Doug – you need to have automated controls, should have in-motion monitoring for posts (Socialware provides this)

For more information on this webinar check out Doug Cornelius’ summary post here. And finally if you are interested in getting started with social networking please take a look at how Socialware is helping firms and individuals today.

Have you ever logged into Twitter and noticed that your Direct Message count was shrinking? You probably thought it was a case of the mysteriously deleted DM. Doing a quick Google search on the issue would present you with the answer. It actually isn’t a bug, a hacked account or a mystery at all. Twitter is behaving exactly as it was designed.

Here is the explanation from Twitter on the topic:

“Direct messages behave more like tweets than emails: any action the sender of a DM takes on a direct message will affect the recipient of that DM.  As the recipient of the Direct Message, you have the ability to delete it; the messages you delete also disappear from the sender’s sent tab. Conversely, deleting direct messages you have sent will also delete the message from the recipient’s inbox forever.

The number next to your Direct Messages tab reflects the number of direct messages in your inbox. If this number has changed recently and you have not deleted any of your messages, remember: the sender of the direct message has the ability to delete messages from your inbox, these messages are not mysteriously disappearing or getting lost.”

Repeat after me. A DM is not the same as an email. A DM is not the same as an email. A DM is not the same as an email.

Now that we all understand how DMs work and the fact that the creator can delete them or the recipient (remember, it will be deleted on both accounts) lets dive into the compliance issues for any regulated industry such as FINRA/SEC firms, Educators, Government agencies or entities, etc.

The most obvious area this impacts from a compliance standpoint is archival and discovery. If you are in a regulated space and are not currently using an archiving solution then you are at serious risk of being out of compliance. You may be doing the right thing by not deleting any sent DMs but the second a recipient deletes a received DM it will be removed from your account as well.

For a lot of Twitter users they like to keep their inboxes clean just as they do with email. And there are a countless number of services (such as DM Whacker, SocialOomph, Twitter DM Deleter) that make it easy to quickly delete all DMs, whether received or sent. Translation, you need to act now.

If you are a medium to large firm it is critical that you scan and archive this information in real-time. If you don’t you risk someone sending a DM and then removing it. The result would be a lack of compliance with FINRA/SEC guidelines, Freedom of Information ACT guidelines, possibly corporate guidelines and the list goes on.

For additional information on compliance issues related to social networks please download our recently published guide.

The challenges are very real in these highly regulated environments. Kip Gregory sums it up well “Who could blame any firm operating in a regulated industry for taking a cautious approach in the face of all that? Especially in financial services, which is at its core an industry built around the management of risk. The question is: How do you, as a competitor in this business, choose to respond to a clearly shifting landscape?”

Of course the latest move by FINRA helps ease some of the concerns of these financial firms. With the release of Notice 10-06 they address some of the big questions firms are asking. In addition to this Notice you can also download the Companion Guide to FINRA Social Networking Compliance. And if you are still hungry for more information be sure to check out the play-by-play summary of the February 3^rd FINRA webinar on this topic.

The article then moves on to discuss the “techno-solutions” to solving the social networking compliance problem. They highlight our Risk Manager solution for it’s ability to turn on or off any part of a social network that could cause a compliance issue. In addition, there is discussion around our ability to moderate content before it hits the social sphere as well as providing full capabilities to do a post-review after the fact.

I don’t want to give the entire article away so let me just leave you with a few final thoughts:
- Social networks are here to stay and the firms that find ways of adopting them first will have a big advantage. In fact the article points out that “100 percent of the 48 firms surveyed thought social media was here to stay and 84 percent thought it would have a lasting impact on financial services.”
- You do have to create a social media policy (don’t skip this step) – here is a good place to start (first paragraph)
- Look for ways to institutionalize your policy through social networking compliance solutions.
- Plan for change – the sites change, compliance issues change and the way advisors use these tools will change.

Read the full Research Magazine article here

Kristen Luke

1. Tell me a little about your background and Wealth Management Marketing
“Prior to starting Wealth Management Marketing in October of 2008, I headed up the marketing department of a boutique wealth management firm in San Diego for 3 years.   It was a natural transition from working at my previous job to starting WMM since I performed similar tasks, but now I do it for a variety of firms instead of just one.   I have a BA in Business Economics from the University of California, Santa Barbara and an MBA with an emphasis in Marketing from San Diego State University.  WMM develops marketing plans for independent advisors and also provides the back office support required to implement the strategies. Basically, we are an in-house marketing department outsourced.”

2. Can you profile the clients you typically work with?
“I primarily work with independent investment advisors and financial planners.  The majority of my clients are RIAs which can range from solo practitioners with $10 million in AUM to firms with 20 employees with a few hundred million in AUM.  I also work with individual advisors at larger brokerage firms who need help creating their own individual marketing plans or are looking for assistance in creating a social media marketing strategy.”

3. What are their top issues/challenges when it comes to social media marketing?
“I consistently hear the same two challenges from my clients:
- Meeting compliance requirements.  Up until recently, it was not clear what an advisor could and could not do according to FINRA.  It is still unclear about what the SEC requires.  So many advisors tell me that their compliance departments won’t allow them to participate in social media.  I’m not sure if this is going to change now that FINRA has released their guidelines.”
Quick Note: The Companion Guide to FINRA Social Networking helps address these questions.
- “Finding the time to participate in social media.”

4. What percentage of your clients are engaged with social networks today?
“Almost 100% of my clients are engaged with social networks in some way.  Most of them are only involved with LinkedIn.  Closer to 50% are involved in Facebook or Twitter for business purposes.”

5. For those that are active how are they dealing with compliance issues?
“Some advisors have not been concerned about it and are doing nothing.  Others are passing everything through their compliance departments prior to posting on LinkedIn, Facebook and Twitter.  Others are using sites likes Socialware to archive their social media activity.”

6. What would recommend to your clients that are getting ready to start engaging with social networking?
“I would recommend that they first understand what they can and cannot do from a compliance standpoint.  Then I’d recommend they start playing around with the different sites to get an understanding of which ones they like.  I find that the advisors that are most successful with social media are the ones who personally enjoy interacting on the different sites.  Once an advisor has a basic understanding of social media, it’s important to create a plan of action.  This includes finding their target market and centers of influence on the different sites, determining what type of information to broadcast and how often to do so.  Social media is like any other type of marketing.  It should be planned out to increase the likelihood of success.”

It is clear from our day-to-day conversations and interviews like this that social media will continue to play a big role for independent investment advisors and financial planners. As Kristen points out it is critical to understand the compliance issues before jumping into this new channel of communication. I’ve already mentioned the Companion Guide to FINRA Social Networking and in addition you should look at the summary of the recent FINRA webinar explaining Notice 10-06 on Social Networking Compliance.

For more information from Kristen you can follow her on Twitter or at her blog.