As social networks continue to evolve four years later, there is still a lot of truth in the POST concept since it speaks to the need to bring business objectives and the customer central to decisions about social media.

One anecdote that I heard recently from the Austin Facebook team is the insightful comment by the CMO of Diageo, Andy Fennell, who spoke recently about marketing no longer being like bowling where you are pushing out a message in hope of it hitting the audience.  Marketing is now more like a pinball game with dynamic interaction.  This involves listening, responding, engaging rather than just sending a message one way at people.

There continues to be new technology capabilities on social networks sites, but the question is still… what business objectives are you trying to achieve?  I overheard a set of questions during a social media conference along the lines of… should we do such and such on Facebook or on Twitter?  While each social network has unique aspects, often, the answer comes from what are you are trying to achieve and how will you measure if it is working vs. jumping directly to the features and capabilities of each individual social network.

One key strategy question is whether you are looking to use social media to speak as a company brand with an arm distance relationship with your fans, followers, or friends?  Another option for many companies with large distribution channels is to approach social media as a way to have a much closer, engaging relationship from person (advisor) to person (client or prospect) vs. a company speaking to people.  It may even be a combination of both strategies that works best for your firm.

So how do you not only get started, but start effectively, efficiently and importantly, quickly? If the social networks keep releasing new technology options, than there’s no time to spare.  That means looking for resources that already exist from trusted sources, so you don’t have to recreate the wheel.  Examples include:

• Policy templates
• Quick start guides
• Best practice examples aggregated from firms that have already initiated programs
• Programs to get employees up and running on social media

The discussion around social media has so many metaphors, but social media really isn’t like a light switch except possibly a dimmer switch.   It is your firm’s decision how quickly and fully to turn on the light and embrace social media while keep in mind those key considerations:

• People (your current and future clients)
• Objectives (what are you trying to accomplish and how does social media fit in)
• Strategy (quick start programs, best practice resources, and employee training)
• Technology (ensure compliance, enable measurable results, stay on top of social technology changes)

Social Media is a Key Financial Marketing Tool for the Future — Just Comply!

Tom Groenfeldt, Forbes

Financial firms are striding into social media with their peripheral vision scanning for warnings from regulators of compliance problems.

Mastering Social Media

Ellen Uzelac, Research Magazine

Social networking cannot be ignored, and there’s a right way to do it.

How to Deal with the Brave New World of Social Network Policies

Tom Steinert-Threlkeld, Securities Technology Monitor and Financial Planning

Social networking? Everyone’s doing it. Particularly your next generation of fund customers. You will want to reach them, as they walk and talk through the Internet.

New York Life: Allowing Negative Comments on Social Networks Will Positively Build Your Brand!

Bradon Gutman, Forbes

In this Brand Innovator Spotlight, Ken Hittel, VP Corporate Internet at New York Life explains how the insurance company is growing a positive brand presence online by allowing consumers to speak freely.

Get With The Social Media Program

Mike Byrnes, Financial Advisor

Firms that prohibit use of social media are fighting a losing battle, and should instead focus on how to use it compliantly, said attendees at a social media conference in Boston.

As I encouraged the attendees to jump into the conversation and share their experiences, questions and thoughts, only a few minutes passed before they responded.  This free flowing conversation created an unmatched dialogue specifically focused on the challenges and opportunities of social media in financial services.  During the forum breaks, there was so much conversation between the attendees representing more than twenty firms including wealth management, insurance, broker dealers, and industry associations, it showed the strong interest in this type of event.

All of us benefited from a variety of presentations including an update on the regulatory perspectives on social media use by Steve Selby, Director of Regulatory Services at LIMRA from the roundtable that Socialware and LIMRA hosted in May in Washington, D.C.  Panelists from Forrester, Guardian Life, LinkedIn, and Morgan Stanley Smith Barney, shared their thoughts and fielded numerous audience questions.  In closing the panel, each speaker discussed the one word that explained social media in financial services with answers including “everywhere, dynamic, efficient, relationships.”

Throughout the forum, attendees also discussed what it takes to adopt a culture that embraces social media and how to ensure firms are focused on the differences between social media and social business including the necessity to measure what the firm values when using social programs.

A lot of interesting stats were shared during the presentations.  For example, according to Forrester, 60% of individuals with investment accounts use social media and more than 90% of households with $1MM in investable assets are online. Speakers also made points including one from Steve Holstein, CMO of Guardian Life Insurance of America, “ Social media is here.  The question is what process to put in place to support it.” To learn more about the Social Media in Financial Services Forum, you can read the live tweets from the event by visiting twitter #fincmo.

The entire Socialware team is pleased to welcome Morgan Stanley Smith Barney to our expanding list of customers that includes the leading financial services firms who are embracing social media in build valuable customer relationships.  Social networks, including LinkedIn, Facebook and Twitter, provide an unprecedented way to attract, win, engage, and retain customers.

Jen Hoyt goes on to report “A major issue in the brokerage industry has been how to utilize social-networking sites while staying compliant with industry regulations that say all electronic messages must be retained for several years. Morgan Stanley Smith Barney said it will implement a technology from the company Socialware that will capture and retain all communications on approved social-networking sites to comply with regulations. Until now, Morgan Stanley Smith Barney advisers who wanted to use LinkedIn for business only were allowed to have static profile pages on the site, and weren’t permitted to post updates or to connect to new contacts.”

Static profile pages are just one example of the challenges for firms with employees who want to take advantage of the numerous benefits of social networks but have been concerned about staying compliant.  Socialware Compass has helped more than 100 financial services firm overcome these types of challenges.  Socialware Voices gives firms even more ability to address the opportunities of social networks in the same way that Morgan Stanley is embracing.  Socialware Insights, a social business intelligence service, ensures firms have the best in class approaches to implementing these programs.

We welcome Morgan Stanley to Socialware, and we look forward to working together to build valuable and measurable customer relationships through social business.

We recently asked top firms in the industry to share the most pressing compliance concerns within their organizations or from colleagues across financial services companies.  The responses shared both the challenges and opportunities that social networks present for business today.  

There was overwhelming feedback that there is still a lot of room for clarity and ensuring that restrictions are consistent with the nature of the social medium.  Some feel that the rules are out of date compared to the ever changing technology and capabilities of the social networks.

Interestingly, social media compliance concerns can vary by department. For example, compliance staff is concerned about effective supervision of business communications. Marketing wants to know which messages are most used, which have the most feedback, and which have generated the most interest. Corporate Communication is interested in protecting the corporate image. Human Resources is interested in employee usage of social media including what they are saying and how much of corporate time are they using to say it.

With all of these questions in the industry, how should that need for clarity be resolved?

Working with more than 100 firms for more than two years on these challenges, we are well aware of these concerns but also the growing examples of firms that are successfully using social business techniques and practices to grow their business.  In order to help bridge the industry and regulation divide, we recently hosted, with LIMRA,  the Regulator Roundtable on Social Media in Washington, D.C. Joined by attendees from seven regulatory agencies and four industry associations, we had a lively conversation about the unique dynamic for social media in the financial services market.

At the roundtable, we shared the concerns that came directly from industry firms.  We discussed how those concerns mapped to the objectives of the regulators.  We covered specific topics like privacy, security, policy and supervision in order to find that middle ground of effective but also compliant social media usage.  The roundtable discussion was well received by all, and we plan to have an ongoing dialog on the topic.

Are you looking for answers for how to ensure compliant and successful social business programs for your organization?  Contact us directly to learn more about how your firm can respond to the compliance challenges in order to realize the business opportunities in social.

We might never know exactly what happened, why it happened or why it wasn’t caught. But we can learn from this example. In this case, one simple email has cost the firm in excess of 100 million dollars (my rough estimate). Here is how I got there:

• Loss of the investment banking fees – $30mm. This is one of the largest deals in Wall Street history and the firm stood to make tens of millions on the deal on fees alone.
• Lost proceeds from orders – $30mm. As the firm to bring the IPO to market they also had the ability to take orders from their investors. By being removed they lost this right, every order and every commission.
• Relationship, brand damage & lost future revenue – $40mm. There is no doubt that this will leave a lasting impression on investors. You hope that individuals will stand by their broker but it is possible they will lose a number of accounts and many of them will be quite large and quite profitable.
• Loss of time – $1-10mm. This one is tougher. No doubt all the time put into the analysis, the roadshows, the sales calls, etc. is all for naught. Aside from the actual cost of the man-hours, think about the benefits of applying that time elsewhere. While this is the smallest bucket it is still worth pointing out.

What if this had gone out through a tweet or status update? Could it have been stopped? How will firms deal with these scenarios in the future?

The short answer is yes, it could have been prevented, assuming firms think through their policies and procedures to govern them. In addition, they must adopt the right technology solutions to ensure it can all be managed.  Let’s look at each area in detail.

• Policy: a firm’s social media policy should have provisions to account for the specific needs of each business unit. While FINRA regulated reps have one set of issues to deal with, these will be different from the recruiting team, analyst team or brand marketing team. Additionally, firms should consider the concept of a more restrictive policy based on specific projects, such as an IPO and the required quiet period.
• Procedures: the next step is making sure the firm has the right procedures in place to review critical projects and timelines, to update policy and to also change the types of keywords or phrases to search for in electronic communications (both email and social media).
• Automation: last, make sure your solutions can keep up with this level of change. You want the granularity to set policy by user and role. You need the ability change user policy in real time (referring to the technology that scans and automates your physical policy). And finally, the ability to set and update those lexicons of words and phrases as needed.

This truly was an unfortunate mistake, but one that is worth analyzing as firms look to prevent it from happening again in the future.

Yet another study of financial professionals – this one by American Century Investments – finds that advisors are using and benefiting from social media for their business.

• 44% of advisors who use social media for business or business and personal use agree that social media is an emerging trend with significant potential for businesses like theirs.
• 73% of the participants have a profile or account with one or more of the social media types mentioned.
• Facebook was in the top position with 55% and LinkedIn was next with 46%.
• Of those who use social media for business purposes, almost one-fifth (19%) do so daily – either once a day or multiple times a day.
• Respondents reported their top three business uses of social media as: A) researching people (e.g. prospects, contacts and current clients); B) monitoring industry and market news; and C) reading expert commentary and insights.
• 71% reported they have one or more future business uses planned for social media, primarily monitoring industry and market news, followed by reading expert commentary and insights and researching people.

So what keeps them up at night?

Nearly half (47%) of respondents named regulatory or compliance issues as their single biggest concern with using social media for business purposes.

“Understanding how to better navigate compliance guidelines and industry regulations on social media use could bring peace of mind to financial professionals and spur adoption of its use,” Jennifer Sussman, director, Online Marketing and Experience for American Century Investments, said.

The rest of the study continues to show that financial services representatives are ready – or already using – social media, and their concerns about compliance are holding them back. Of course, the firms that figure out – and efficiently execute – their compliance plans will enjoy the competitive advantages of being first to market with this invaluable channel.

If you are looking to educate yourself on the compliance issues raised by social media sites you can start with a few of the resources below. In addition, check back in about a week for details on our own study of Financial Advisors use of social media.

• The Companion Guide to FINRA/SEC Social Networking Compliance
• The Guide to Twitter Social Networking Compliance
• Previously recorded and upcoming webinars on issues of compliance to social media best practices

We hope these resources help you navigate the compliance risks and opportunity in the waters of social media.

“This webinar covers compliance and regulatory considerations when using social networking sites to communicate firm business. With the advent of Facebook, LinkedIn, MySpace and Twitter, business use of social networking sites has become popular and can present supervision challenges for firms. Panelists from FINRA discuss the guidance that was recently issued in Regulatory Notice 10-06.”

If you already read Regulatory Notice 10-06 you didn’t miss too much. I will say the most valuable part was the Q&A from the audience and FINRA staff. As you might expect the FINRA team focused on the overarching guidelines but didn’t spend too much time interpreting specific situations. They made it very clear that this is the responsibility of the firm to evaluate a sites capabilities and determine what the firm’s policy will be on usage, supervision, record keeping, etc.

If you are looking for more details on how these guidelines get interpreted for use on social networks you should download the Companion Guide to FINRA Social Networking Compliance.

And if you are interested in a summary of the webinar here are all of my live tweets that I posted during the session. Feel free to follow me on Twitter and send me any questions you have.

• Joe Price talking about FINRA task force on social networking, 14 industry participants, came out with Notice 10-06
• 5 key points, record keeping, suitability, types of content, supervision & 3rd party posts
• Record Keeping: rules flow from SEC standards, no way to change this. Must retain, archive and retrieve to be compliant
• Record Keeping: technology is going to be the issue, FINRA spoke to firms (including Socialware – we solve this today with Risk Manager)
• Record Keeping: discussing integration to enterprise archives, lot of interest in area, each firm needs to assess each solution
• FINRA will not endorse any technology provider, firms need to assess the fit, determine if it delivers on compliance needs
• interested in position on acceptable formats of social media messaging for FINRA filing and internal record keeping
• Question: how do you file a tweet? Acceptable filing format is PDF for FINRA but not for retention (discovery issues, etc)
• Suitability: 01-23 applies to social media directly, applies around recommendations, “call to action” or “suggestion”
• Suitability: more specific to individual more likely it will be a recommendation, general news not a rec.
• Suitability: call to action is key, not going to have prior approval requirement so be careful of what you post
• Possible use of templates? Firms have libraries, drop a recommendation of an approved template, be careful of specific products
• Question: “Business as such?” SEC term, not addressing it in Notice 10-06, books and records rule apply in this situation
• Question: “if we decide to utilize social media we must have technology to track information” there are low tech options…
• …technology is going to be key to make this scale
• Question: “if a rep indicates where they work is that an advertisement?” ex: business card info on LinkedIn, likely already approved
• Question: “business related inquiry on social media site?” addressing later, need to have procedures for reps to follow
• Content Types: “interactive electronic forum” have def. of public appearance (i.e., chat rooms), must all be supervised
• Content Types: public appearances do not need to be pre-approved
• Content Types: blogs? static communication = advertisement = prior approval. However some allow for interaction
• Content Type: These interactive blogs would be considered a public appearance (i.e., allowing comments)
• Question: “What if firm hosts a blog and allows for 3rd party comments? What if it is a marketing brochure blog?” This is static
• Content Types: key ideas, employees should have site use approved for use of logos, content, etc (the static elements)
• Content Types: engaging on the sites can then be supervised post-use, these are the interactive pieces
• Content Type: firms should decide on their own policies as part of this.
• Content Types: key is whether or not a dialogue is supported or intended on these portions of social sites
• Technology to capture content is still evolving, will there be compliance grace period? FINRA answer “No”
• Firms must make the call if a vendor can meet the FINRA requirements (check out companion guide http://bit.ly/72HiGj)
• Recently looking at a blog that wasn’t interactive, send email back and comment *not real-time interactive communication*
• Question: “On Twitter, is initial posting interactive or static?” background content is static part, tweets are interactive
• Question: “what if social site doesn’t allow for archiving?” answer don’t use it or use a 3rd party solution (i.e., Socialware)
• Question: “what about broker-to-broker communication?” defined as institutional sales material (2211), already defined
• Question: “How will FINRA test compliance?” FINRA provides policy guidelines, new process, examiners take steps to analyze steps  …
• Question: …will look for supervisory steps, will look for policies, will look for other steps that compliance is being addressed with
• Supervision: interactive communications can be supervised, implement risk based principles to review communications
• Question: “Use of sites for recruiting?” Yes – they are subject to FINRA advertising rules, static vs. interactive
• Question: Recruiting issue – expectation of earnings. Be careful here, this is most frequent issue
• Question: “can registered reps conduct pre-approved, scripted, filed FINRA presentations via a webex type of application, w/instant messaging” …
• …”assuming IM’s are being supervised by a reg. principle?” webinar=static, questions=interactive (can be supervised)
• Supervision: can choose to pre-approve or not, can choose to sample pre or post, lot of flexibility, you decide
• Supervision: communication between research and investment bank always need review, as well as incoming complaints
• Question: “do personal social sites of RR need to be monitored to ensure not being used for professional use?” …
• Question: … firms need to establish procedures/policies on this, once used for business firms are responsible,
• Question: “don’t want reps using Facebook, agree not to, is firm responsible to still track?” I don’t know, maybe based on person
• Question: “are firms accountable for how RR identifies themselves on personal SN site” firms need to adopt clear policies on this
• Question: “does review of interactive communication have to be conducted by a registered principal” can be some delegation
• Should not allow RR to use social media sites if you cannot supervise it (for business purposes)
• Ensure you train those that are granted access, enforce your procedures, have consequences for violations
• Question: “prohibit from using certain social site features, are firms accountable if RR use them if “prohibited”?” …
• Question: Answer is same. They are responsible. (Socialware can disable these features completely to protect the firm – look at Feature Level Access Control of Risk Manager)
• Question: “how do you supervise an anonymous complaint?” guidance already provided, must be able to identify person & issue
• 3rd Party Posts: not subject to advertising rule (great clarity), situations where you can be held accountable
• 3rd Party Posts: adoption & entanglement, you republish or direct people to content, you just adopted it and endorsed it
• 3rd Party Posts: influenced posts, can you please post a testimonial to my Facebook page = entanglement
• Question: “implicit endorsement of posts, rep didn’t remove a comment?” does not create an endorsement situation
• Question: “RR retweets a post, is this an endorsement/entanglement” absolutely endorsement or adoption
• Question: “What if you “like” a comment on Facebook” Yes absolutely that is an endorsement (FYI – Socialware can block this)
• Question: “what if statement is just wrong, what should firm do?” adopt policy to enable quick action, still needs to be supervised
• Adoption & entanglement is SEC concept, one-off answers not the way to go, each firm should develop a complete policy
• Firms are doing a lot of different things to monitor 3rd party posts, complaints, publishing guidance
• Great FINRA webinar, hope you enjoyed the live tweets, be sure to grab the Companion Guide for SN Compliance http://bit.ly/72HiGj

Look for much more from Socialware on this topic. And if you haven’t registered for a Risk Manager invitation please do so here (it is free). Of course, if you want to get started right away you can sign up for the premium version here.

You can listen to the recording (about 20 minutes long) by pressing play below.

As part of the podcast I addressed the following:

• A little bit about my past experience (boring but very short)
• What is Socialware? How long has it been around and what is the company’s mission? What is “social middleware” exactly? (getting to the good stuff)
• What sort of challenges did you see at Socialware when you joined the company and how did you go about formulating a marketing strategy to address those challenges?
• As a senior marketing executive, have you started to leverage “social media” into your overall marketing strategy. Can you tell us when and how you started to think about social media as a valuable, legitimate channel of communications?
• What do you see social media developing into? What are the trends you see as social media evolves and is adopted by more and more people?
• Given that your target market is marketing and communications professionals are you seeing people starting to use social media for applications other than influencer relations, such as lead generation or sales cycle support?

I want to thank Jeff again for inviting me to participate. Please have a listen and let me know what you think. Hopefully, I was able to share at least one interesting nugget for the marketing folks out there or those just interested in social media.