While most Facebook page adminstrators love it when people reply favorably to a wall post, this same exact activity can get a financial institution in trouble.
Any posts by third parties endorsing what a financial institution has written about itself is now the equivalent of an advertisement in the eyes of the Securities and Exchange Commission, according to Advisor One.
The SEC recently wrote in an advisory letter saying that Facebook wall posts that are testimonials have the potential to break rules on what financial services firms are allowed to say in promotions read by clients.
One law firm claims that likes on a page signal only page endorsements and are not testimonials for the money advisor, but SEC regulators remain wary, according to Advisor One.
Financial advisors with large firms are being told to avoid social media or run the risk of having every post pre-approved. Another major hurdle is file retention – a necessity under strict government guidelines, but difficult to maintain, due to the constant stream of social media information.
Morgan Stanley Smith Barney is utilizing other social media but not Facebook. For the time being, this social network remains off limits to their advisors, who can maintain a personal page, but not even disclose they are advisors.
Independent broker-dealer Commonwealth Financial Network will kick off a limited Facebook presence in just a few weeks. It will be closely monitored and subject to posts approval by Erado Message Control, ensuring compliance. Erado’s Chief Executive Officer Craig Brauff says all postings have to be captured and retained for legal discovery purposes for possible review, according to Advisor One.
Some consumer banks are in it to win it, like ING Direct, boasting 46,000 likes on their page. Posts range from a woman whose arm got stuck in an automated teller machine machine to tips on saving money and stray off to questions such as ‘glazed or crème-filled’ on National Donut Day. Mix in a little Zen with posts such as “you save, therefore you are,” and a contest for a road trip based on best ideas for passing the time and you have full engagement from fans. ING even posted a link to its Q1 earnings call.
Conversely, BMO Financial Group out of Montreal has a fairly flat page with a brief history, no comment threads and only 627 likes.
Summing up, global financial services firms are hedging their social media bets as they grow their own knowledge of living within SEC regs, while consumer banks vary wildly from contests to company history.
Have you seen your bank or broker on Facebook?