Autorité des Marchés Financiers (“AMF”), the French regulator for financial markets, has recently updated its rules to clarify its policy on social media usage by asset management companies and debt securities issuers (“Regulated Firms’). The final ruling by AMF follows a recent consultation that was opened up to the public in October 2015, Hearsay Social participated in providing detailed comments to AMF. This ruling is also consistent with the approach taken by other EU regulatory bodies overseeing financial bodies.
Here are four tips for Regulated Firms in France to implement the regulatory requirements: 1. Policy and Training Since Regulated Firms may be held liable for content that their employees post on social media on the firm’s behalf, Firms should implement a social media policy and train their employees on such policy. Here are key takeaways for a good social media policy: Social media policies should be written in clear and concise language: A recommended route is to “state the rule” and then provide an illustrative example for the rule (e.g. acceptable tweet v. unacceptable tweet. The social media policy should clearly define the consequences of breaking the policy, and designate roles and responsibilities within the firm identifying individuals for administering and enforcing the policy. Each firm should review their policies and procedures on an ongoing basis for their adequacy and the effectiveness as new laws are implemented. Once the policy is laid out, employees should be trained on the policy. Firms should consider having employees sign an attestation that they read and understand the policy on an annual basis. 2) Distinguishing between personal and business use Whether a social media post is compliant depends on the content that is being used for professional purposes rather than being used for personal means. The AMF has therefore encouraged Regulated Firms to ensure that Firms have distinguished a separation between personal v. business use of social media. Here are some practical tips for ensuring these requirements are met:
Distinguish between a firm’s own social media accounts, and accounts for individual officers or employees at the firm. For the firm’s own accounts, there should be a clearly defined policy about who is permitted to post material, and with what level of review (before or after the postings).
Firms should clearly distinguish between allowing for their advisors to use business-related accounts for work versus their personal accounts. Companies typically bar the individual from discussing business communication on personal accounts.
Firms should monitor and retain content only on the individual’s business-related accounts or business related posts.
3) Content should be accurate, clear and not misleading The AMF’s statement also reminded Firms to take appropriate action to ensure that all promotional material has content that is accurate, clear and not misleading. Firms must also take steps to ensure that any promotional materials should be identifiable as being marketing and advertising material, for example by using #pub or #publicité hashtags. Businesses can apply this rule by having adequate systems in place so that all communications are monitored and supervised, for example, by having legal disclaimers for statements that are promotional in nature. The rules also require that each business communication must be compliant when read as a collective message or by itself. This rule is similar to the the FCA guidance in UK that requires all social media communication to have “standalone compliance.” This includes content that is shared on Facebook or retweeted on Twitter, even if the employee sharing the information is not the original source of the content. To reduce this risk of liability, Regulated Firms should consider implementing systems for monitoring their employees business related communications on social media. Here are some practical steps to follow:
Implement a library of pre-approved content for timely dissemination that has been approved by appropriate people within the firm (e.g. compliance/legal);
Create an approval system/workflow for approving new or original content created by advisors; and
Ensure there is an appropriate monitoring system in place that will flag content that is non compliant.
4) Recordkeeping The AMF reminded businesses that they should protect themselves from legal, regulatory and reputation risk by implementing appropriate archiving solutions for all business related communications. Additionally, businesses should adopt a policy and archive its business related communications, whether conducted through public or private messaging means. Following the release of this guidance, firms operating in France should reevaluate their policies to ensure that their practices remain compliant. Digital channels like social media are a strategic enabler for businesses and adopting such mediums is not just a nice to have. However, the protection of consumers from misinformation and abuse is paramount and regulators’ focus on this is key. AMF’s latest ruling is a step in the right direction in encouraging innovation in the financial services industry while at the same time ensuring investor protection. AMF’s ruling is in line with guidance released by the UK, U.S. and other countries. In the U.S., which was the first to formalize regulations around new channels like social media, the regulatory bodies (FINRA and SEC) do spot checks at financial firms to ensure compliance. We believe other countries will eventually follow suit and companies that prepare for this future will have a competitive advantage. The clarifications apply to the following texts: For asset management companies:
DOC-2011-24 on drafting CIS marketing materials and distributing CISs; and
DOC-2012-19 on drafting a programme of operations for asset management companies and self-managed collective investments
For issuers of structured debt securities:
DOC-2013-13 on drafting marketing materials for the sale of structured debt securities.
Thanks to all that attended our #HScompliance presentation on social media compliance for the financial services industry. Please find the webinar replay below as we share the latest compliance research and best practices collected from our client and member firms, and what financial services firms need to be aware of in 2016. In this 45-minute webinar, moderated by Victor Gaxiola, Sr. Customer Advocacy Manager at Hearsay Social, you’ll hear from Yasmin Zarabi, Hearsay Social’s VP of Legal and Compliance, and Stephen Selby, CRCP, Assistant VP of Social Media Strategy, Audit & Regulatory Relations at LIMRA as they discuss:
The current state of digital technologies in financial services
FINRA retrospective rule review
The DOL’s pending fiduciary rule and its potential impact to social media
Compliance-enabled text messaging programs for advisors
Since 2009, we’ve been able to Like content on Facebook, making it easy for us to express a virtual “thumbs up” to our friends’ baby announcements, big moves to new cities and wedding photos. But a Like doesn’t fit certain status updates or news articles. In the past, when a friend shared that a loved one had died, I’ve vacillated between hitting the “thumbs up” or saying nothing at all. It didn’t feel quite right to Like that type of post. But I still wanted to express something. Others have felt the same way. According to Facebook CEO Mark Zuckerberg, people have been asking for a Dislike button for years. But what they really wanted was the ability to “express empathy,” he said in an a Q&A at Facebook last September. So, his team worked on a way to make the “thumbs up” more expressive. On Wednesday, Facebook rolled out Reactions, an extension of the Like button, to give users more ways to share their reactions to a post in a quick and simple way. Now you can hold down the Like button on mobile or hover over the LIke button on desktop to express how a post, photo or article makes you feel by tapping Like, Love, Haha, Wow, Sad, or Angry.
Facebook has become a place to share news about life’s highs and lows. Being able to express our excitement at a friend’s new job post or our mourning over the loss of a loved one gives us a more empathetic experience on Facebook.
Reactions also show us how others are engaging with our own posts on the social network. For financial advisors and insurance agents, this new feature could prove to be a more nuanced way to assess how prospects and clients are engaging with content on Facebook. So, how does this apply to financial services? Any time new functionality is introduced by social networks, firms need to look at this functionality from a compliance standpoint. If your policy is to prohibit advisors and agents from using the Like button on Facebook, you may consider applying the same policy to Reactions. You may also consider that some firms adhere to the 2012 SEC Risk Alert which states that interpretation of a Like as a testimonial is based on the facts and circumstances surrounding the type of post or piece of content. As always, you should consult your firm’s policies and talk with your compliance team about the application, if any, of these or any laws or regulations restricting advertisements and other communications with the public to your business. Disclaimer: The material available on this blog is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of the information provided herein.
Recently, I participated in KPMG’s 12th Annual Audit Committee Issues Conference at the Ritz-Carlton in San Francisco. The event – Governance Challenges & Priorities Driving the 2016 Agenda – spanned two days and covered several pressing topics that corporate boards are currently facing and will encounter in the near future.
I had the pleasure of joining Ken Daly, CEO of the National Association of Corporate Directors (NACD), and Tim Flynn, board director at J.P. Morgan and Walmart, on a panel titled, “Thinking Differently: The Changing Boardroom Conversation.” We had an interesting and candid dialogue on the changing role of boards and management teams amidst technology-driven seismic shifts in consumer behavior. Here are two particularly important takeaways: The need for an offensive – not simply a defensive – mindset Tim spoke about the current challenges that corporate boards are facing and the need to balance the giving of insight versus oversight. Piggybacking on his comments, I discussed how in times like these of fast-paced disruptive innovation, boards and management teams must shift from a defense-only model, maintaining status quo core businesses, to also playing offense, taking risks, experimenting with new customer engagement models, and – above all – embracing technology. In regulated industries in particular, it’s all too easy to use regulatory compliance as an excuse, but the greatest risk of all is doing nothing. The importance of shifting to new business models
In the face of these challenges, boards and management teams should not merely delegate social, mobile, and digital innovation to a designated “digital director” on the board or to IT or a social media marketing team and think they have it covered. Boards must instead personally understand and use these emerging technologies in order to experience the world as their customers and employees do, and think not only about creating Twitter pages, for example, but potentially entirely new business models spanning multiple channels that appeal to today’s always-connected, social customer over time. To read more about KPMG’s conference, check out the full program. Related Posts:
In 2015, the exponential changes taking place within the technology industry was a recurring theme in the business world. Change was no longer just ubiquitous; it was accelerating. Today, this message has become even clearer as technological advancements continue at a rapid pace and are revolutionizing every aspect of our daily lives.
I wrote how this is fundamentally changing the consumer experience in a recent article published by Fast Company entitled “The Rise of Millennials, Crowdsourcing, And Automation.” But what about the enterprise? Here are two massive trends that business leaders need to watch in 2016:
The vertical cloud comes of age
For some years now, many cloud vendors have sold their products to multiple industries – an approach that has worked exceptionally well for companies like Workday and Salesforce. In 2016 and beyond, thanks to key technology developments across the public and private arena including low cost web hosting services and no-cost open-source programming languages, we will see the vertical cloud come of age, particularly in highly regulated industries such as healthcare, government, and financial services – industries that have largely been neglected by Silicon Valley due to the unique complexities involved. According to Frost & Sullivan, the opportunity in healthcare cloud will grow from $903 million in 2013 to $3.5 billion in 2020, while TechNavio predicts cloud financial services will grow 25% per year through 2018.
With the privilege of focus, vertical cloud solutions will be game-changing with obvious benefits. It offers more tailored offerings to address specific needs and solve unique industry challenges; it offers rapid ease of deployment, eliminating the need for lengthy implementations to customize and “verticalize” a “one-size-fits-all” product; and it allows those vendors to develop true industry expertise and deeper customer relationships such that customer feedback can rapidly evolve into newer and better solutions over time.
Ultimately, this enables those vertical cloud solutions to grow faster and establish dominant market share than traditional software vendors. Gartner estimates that the 2015 vertical spend of $113 billion will grow at 7 percent per year, something that Salesforce took note of last year (following Infor’s lead at their Dreamforce event) by doubling down on their vertical-focused strategy.
Regulators will aggressively play ‘catch-up’ to keep up with the impending regulatory tsunami
In 2016, there will be a growing number of regulators and regulations from the SEC, FINRA, DoL, CFPB, IRS, CFTC, OCC, state regulators, and others. The rapid and revolutionary shifts enabled by technology in recent years have caught regulators off-guard in everything from hospitality and transportation to healthcare and cybersecurity. But in 2016, I expect regulators across industries and countries to aggressively play catch-up and apply new levels of pressure on many disruptive companies.
We’re seeing this start now, with regulators across the globe poking holes in Uber’s business model. Right here in San Francisco, Prop F, aimed at regulating AirBnB’s impact on the tight housing market, failed to pass but still garnered 45 percent of the popular vote.
Not surprisingly, this game of regulatory catch-up is even more pronounced in highly regulated industries such as financial services. For example, the Department of Labor has proposed new rules requiring financial advisors to disclose any potential conflicts of interest with funds they recommend, while leaders at the SEC consider if and how to regulate robo-advisor firms, perhaps holding them to a fiduciary standard for offering (automated) advice.
Hearsay Social, for one, is helping firms and advisors navigate the impending tailwinds by keeping them abreast of these changes and offering solutions to remain successful.
As regulators continue to keep up with these massive changes, 2016 will be a year where businesses across industries will need to prepare for the shifting regulatory landscape while still delivering value to their customers. To overcome the overhead costs and time required to manage to regulatory guidelines and policies, companies will need to find ways to drive efficiency and growth by leveraging technology that enables their workforce to be more productive and compliant. Related Posts:
Text messaging. We’re all doing it. In a recent Pew Research Center study, researchers found that 97% of smartphone owners send text messages. Not only is text messaging easy to do from a mobile phone, it’s a highly effective and efficient way to communicate — and financial services companies can’t ignore it.
But opening up a new communication channel for financial advisors isn’t easy, especially from a compliance standpoint. With regulators paying closer attention to compliance infractions via text messaging, firms need to have the proper supervision over their advisers’ activities on this channel. What the Law Says
Regulations issued by the FINRA and the SEC require that all electronic communications sent from advisers, including text messages, be supervised and recorded for compliance. Specifically, Finra Rule 3110 requires member firms to have a system to supervise the activities of each registered representative, registered principal and other associated person, and that the system must be reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable Finra rules.
Additionally, Finra Rule 3110 requires a broker-dealer to retain e-communications made by the firm and associated persons who relate to the firm’s business as such. Finra is increasingly bringing disciplinary actions against firms that fail to enforce supervisory oversight over e-communications in violation of Finra Rule 3110. Compliance Challenges
Until now, comprehensive compliance solutions for text messaging did not exist in the market and firms have tried to address the compliance requirements in a variety of ways that have exposed some of the unique challenges of managing text message communication. For example, some advisors are prohibited outright from text messaging for work purposes, while others use cellular carrier-based systems to capture text messages. Still others have company-issued devices like BlackBerrys that not only have controls which limit the ability to text, but often burdens advisors with having to operate and carry two separate devices.
As mobile devices become an essential part of daily life, there’s now a growing trend toward having a BYOD (bring your own device) policy, even at the big wirehouses. BYOD policies can further blur the lines because advisors are able to conduct both personal and business communications from a single device, further opening up the risk for crossing the line and breaking policy. This year alone, there have been a number of disciplinary actions for failure to supervise e-communications. Addressing Risk
If there’s a failure to appropriately supervise company-issued devices, the frequency of violations will only increase as more companies migrate toward BYOD policies. It is not a matter of if, but when. Enforcement actions will be taken for text messaging violations either against the company, an employee or both.
In this digital age, advisors need to have as many tools and communication channels as possible to build and deepen relationships with clients and prospects — including text messaging. Companies must be able to provide this technology with the right controls in place. How can they bridge the gap?
It starts with employee education. Representatives of the firms must understand the appropriate use of text messages and when to use another communication method (i.e., in person). Employees should also be educated on policy and process early and often, and companies should include attestation from these employees that they understand the rules and company policies.
Companies must also supervise communications and keep complete records. Failure to do so can result in hefty fines and policy changes that have a significant impact on the business. There are a variety of ways in which organizations can not only manage, supervise and control adviser text messaging but also provide the ability to archive activity; they include third-party technology platforms that enable them to do all this within one dashboard.
Text messaging also poses some consumer privacy risks. Companies should consider monitoring text messages for personally identifiable information communicated via text message to ensure security of all parties’ private information. For example, an organization may want to monitor lexicon terms so they can set up controls and alerts based on the types of messages advisers are sending.
As regulators increasingly crack down on e-communication infractions, the onus is on firms to educate the field about relevant rules and regulations for new channels. Firms must take the appropriate measures to control and supervise texting and still enable advisors to grow their businesses. This article originally appeared in InvestmentNews. Related Posts:
One of our core objectives at Hearsay Social is to deliver industry-leading compliance and governance solutions to our customers. Developing truly innovative compliance technology is multi-faceted; it’s not just about coverage or control, but also about effective governance solutions that must be scalable across an organization. At Hearsay Social, we are focused on building technology that empowers our users to work more productively. We closely study the workflows of our users including compliance professionals, and concentrate our engineering efforts on building powerful technology that makes their daily activities more efficient. Today, we announced a variety of new compliance functionality that provides additional risk controls and increased efficiencies for the compliance teams we work with. These enhancements include: Updated text change reviews:With many tools, it is common that compliance and supervision teams scan static content such as profiles or posts word by word to identify changes. This can be a huge drag on time. We’ve tried dramatically to speed up our customers’ compliance flows by providing visualized change management for text fields. The new solution from Hearsay Social visibly highlights edits in text fields, including additions and deletions, making it possible for compliance teams to clearly compare requested copy changes and make efficient supervision decisions. Customizable supervision dashboards and saved queries:With the launch of the Universal Supervision dashboard earlier this year, we delivered greater visibility and control to compliance professionals. With customizable dashboards, each member on the team can make their own view according to their supervision responsibilities and risk areas they monitor. Instead of requiring a user to repeatedly make the same query, compliance professionals can now save the supervision views and queries they use often in order to more efficiently do their job. Flexible lexicon controls:There is not a one-size-fits-all lexicon for social media compliance across an organization. Different activities across social networks require different policies and controls. Over the past year, we have greatly enhanced the ability for companies to add and manage lexicon terms by activity type, limiting alert and approval queues to activities that are against the rules for each distinctive activity type. On behalf of the entire Hearsay Social team, we’re truly excited to bring these latest innovations to our customers and their supervision teams to ensure social media compliance even more easily, quickly and accurately.
For more details, check out our press announcement.
We’re thrilled to announce our new email solution, Hearsay Mail™, and text messaging solution, Hearsay Messages™, in Europe! Our European customers will have access to the full Predictive Omnichannel Suite™ (#omnichanneladvisor), empowering their advisors and agents to build, deepen and grow relationships with their clients and prospects across multiple digital channels. According to Forrester Research, European adults regularly research online and are comfortable with managing their financial and insurance matters across multiple digital properties. Additionally, as organizations in countries such as the UK (Financial Conduct Authority) and France (Autorité des marchés financiers) are paying increasing attention to the development of industry regulations, the need for a solution such as Hearsay Social to address both the new digital-first consumer and compliance in financial services is clear. Whether on social media, a local advisor website, personalized email or text message, advisors can leverage the suite’s Predictive Content Library, which recommends pre-approved, compliant content – in their local language – based on client interests and interactions to share, making it easy for them to offer the personalized, omnichannel experience their customers and prospects demand. At the firm level, corporate marketing teams gain deep insights on what content is resonating at the local level within these different channels, so they can optimize their content efforts. Compliance teams, too, benefit from a 360-degree view of advisor activity across social, Web, email and text from a single Universal Supervision dashboard, increasing efficiency and productivity. Read the UK press release and French version for more details. We’re excited to continue helping shape the digital transformation of the financial services industry in Europe, and for the Predictive Omnichannel Suite to accelerate our growth abroad! Related Posts:
Today, there are millions of financial advisors and insurance agents worldwide, including more than 500,000 in the U.S. alone. And while technology is rapidly changing consumer behavior, preferences, and expectations, the way a typical advisor engages with customers has largely remained unchanged. What once worked before – cold calling, Yellow Pages, static advisor websites – no longer have a place in today’s digital world. A recent study confirmed 83 percent of consumers prefer communication via email, text and/or social. Customers are now omnichannel: researching online, reaching out to connections via social and mobile for recommendations, and making purchase decisions long before interacting with a single sales professional. In fact, the average consumer spends six hours every day online – on social, mobile, and digital. Add to this the onslaught of robo-advisors, self-service consumer e-commerce sites, and anticipated regulatory rulings, and advisors have even more pressure to deliver more to clients while charging less. Confronted with this reality, advisors must fundamentally change the way they do business in order to stay relevant and survive. Advisors know they need to adapt; they know they need to deliver more value and be accessible across all the channels their clients and prospects are engaging on. But advisors aren’t marketing or compliance experts. And asking advisors to figure out how to do it themselves – or barring them from using these channels due to compliance concerns – has proven to be both inefficient and ineffective. Six years ago, we saw an opportunity to leverage technology to begin addressing these inefficiencies and the need for change through social selling. Since then, more than 115,000 advisors and agents are using our platform to connect with today’s social, mobile, digital consumer. Today, I’m thrilled to announce our Predictive Omnichannel Suite (#omnichanneladvisor), a full set of integrated apps purpose-built for advisors to save time, stay relevant, and deliver more personalized service to their clients.
We’re also announcing a new product: Hearsay Messages. Many of you have told us that clients and advisors want to text each other, but compliance requirements got in the way. Hearsay Messages is our answer to your call – a compliance-enabled text messaging application that will allow advisors to send and receive business-related texts with customers using the mobile device they already have. What is a predictive omnichannel suite? Our four integrated apps (Hearsay Social, Hearsay Sites, Hearsay Mail, and Hearsay Messages) will help advisors engage across channels with their clients. Each app will have built-in predictive analytics to help advisors save time – everything from auto-suggesting meeting reminders to suggesting the “next best action,” i.e., who to reach out to, when to reach out, and what to say. All four apps are built on the same single, unified platform so advisors don’t have to log in to four different systems, and compliance supervision teams don’t have to approve the same action four times. Why are we doing this? The world has changed. Clients expect and demand engagement on their terms any time, anywhere, and on every channel. Traditional field organizations have no choice but to adapt. It’s become our mission to help with this field transformation. Looking back, it’s been an incredible year at Hearsay Social – thanks to your trust and confidence as well as to our second engineering office, which we recently opened in Seattle. It’s been an amazing journey to go from a single social media platform to a full omnichannel suite in less than 12 months. Social selling, beautiful and modern SEO-optimized advisor websites, personalized email at scale that doesn’t feel like spam, and text messaging – all have become table stakes in today’s buyer journey and client experience. We couldn’t have accomplished all this without your support. Here’s to many more milestones ahead together and to helping equip your field organization to succeed now and into the future. For more details, contact your customer success manager and check out our new executive playbook, The Omnichannel Advisor. Also take a look at my keynote, “The Age of the Trusted Advisor,” from our Innovation Summit in June.
As part of my role as founder and CEO of Hearsay Social, I have the pleasure of traveling all over the world to meet with prominent leaders in the industry, learn what’s keeping them up at night, and discuss how Hearsay Social can help them succeed amidst an always-changing business and regulatory landscape. I recently attended BlackRock‘s Leader to Leader event and participated in a panel titled “The Evolving Investor Experience” moderated by Salim Ramji, head of U.S. Wealth Advisory at BlackRock. It was an honor to speak alongside John Thiel, Head of Merrill Lynch Wealth Management; Mark Tibergien, CEO of Pershing Advisor Solutions; and Bill Harris, CEO and founder of Personal Capital.
We had an insightful dialogue on the future of wealth and asset management and, over the course of the event, it was clear from the speakers and the 100-plus wealth management leaders in attendance that four key issues were – and continue to be – top of mind for the industry: 1. Productivity pressure Roboadvisors and, in the U.S., the imminent Department of Labor ruling – in which it’s expected to call for greater transparency into how advisors are being paid in fees and product commissions, including adopting a uniform fiduciary standard – are putting the pressure on advisors to deliver more value to clients.
Advisors can only do this by embracing technologies that free their time to focus on the human, emotional aspects of helping coach clients through tough life decisions. Two of the most time-consuming aspects are asset allocation and business development. Overall, the consensus from the C-suite is that there are big opportunities for advisors to leverage automation and productivity tools to help them recapture some of that time. 2. Democratizing advisor access Data shows millennial clients want both access to do-it-yourself online account management tools and access to a human advisor. Where it wasn’t cost-effective for advisors to serve long-tail clients before, technology has made serving this market much more efficient. Roboadvisors are fine in a bull market, but data already is showing roboadvice clients pulling their money out at the wrong time. This is especially important since most Americans aren’t saving for retirement, or don’t know how, and – based on the math – there’s no way Social Security will be able to support millennials when they retire. 3. Regulatory tsunami There are a growing number of regulators and regulations (SEC, FINRA, Department of Labor, CFPB, IRS, CFTC, OCC, state regulators) that are competing with one another to see who can issue the most laws and establish greater jurisdiction over the industry. This instability is a real concern for small and big firms alike who must stay ahead of and navigate more and more regulations. 4. Demographic misalignment The median advisor is in his mid-50s and male, but the overall client demographic is shifting increasingly toward females and millennials. Industry executives concur that there’s a huge need for tools and technology to reach, recruit and retain a more diverse advisor force in order to stay relevant in the digital age.
While the challenges are very real, there’s also an incredible sense of enthusiasm and optimism. Every firm I’ve talked to has made clear that their focus is on staying relevant to clients, meeting the preferences and expectations of the increasingly omnichannel consumer, and improving productivity. The entire team at Hearsay Social looks forward to delivering the innovation that will ensure the growth and success of our customers, partners and the entire industry. Related Posts: