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Social media compliance updates from the 2014 FINRA Advertising Regulation Conference

Earlier this month, Hearsay Social participated in FINRA’s Advertising Regulation Conference in Washington DC, where we heard regulatory updates, rule clarifications, and practical guidance on social media compliance from FINRA and industry experts.

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The Hearsay Social team at the 2014 FINRA Advertising Regulation Conference.

Once again, social media compliance took center stage as FINRA dedicated two sessions to highlighting the adoption of social media in the financial services industry and the evolution of social media regulation.

At the panel on “Social Media, Digital Communications and Compliance,” the packed audience was eager to hear from Joseph Price (SVP & Counsel, FINRA Corp Financing & Advertising), Amy Sochard (Sr. Director, FINRA Advertising Regulation), Shayna Beck (Senior Manager, Corporate Communications, Vanguard), and Ted Newton (Assistant VP, Advertising Review, MassMutual).

FINRA AdReg panel
Amy Sochard, Ted Newton, Shayna Beck, & Joe Price talk social media compliance at FINRA’s Advertising Regulation Conference.

Some of the key topics and takeaways included:

Interactive vs. static content

FINRA recognizes that not all communications with customers require pre-approval.  Only content categorized as “static” requires pre-approval, as opposed to “interactive” communications, which should be monitored for compliance. In the session, FINRA addressed some of the confusion around what is defined as interactive content. FINRA explicitly stated that content published in a way that allows for other users to comment on, reuse, or “like” to be considered as interactive content.

Key takeaway: If a social media post allows for an “action” to be taken by another user, then firms only need to monitor such content.

LinkedIn endorsements

LinkedIn endorsements and recommendations can be problematic for Registered Investment Advisors (RIAs) under the “Testimonial Rule” of the Advisors Act. FINRA rules do not prohibit “testimonials” provided that such recommendations/endorsements are presented with the appropriate disclosures, such as “past performance are not indications of future performance.” In the session, Ted Newton of MassMutual stated that they allow for their financial representatives to list their skills on LinkedIn as long as they are pre-approved by a principal.

Key takeaway: RIAs should refrain from listing their skills on LinkedIn and they should not allow recommendations on their profiles. Insurance agents and broker dealers that are not registered under the Investment Advisors Act have more leeway to publish skills and recommendations, provided that their principal has pre-approved the content and that it is published with the appropriate disclosures.

Mobile

Mobile use of social media is increasingly common, therefore firms should ensure they are addressing this use case. The biggest concern discussed in this session was that the way content is displayed may vary depending on the device. For example, the same social media content viewed on a smartphone might not be truncated or displayed differently in comparison to how it displays through a laptop browser.

Key takeaway: Your social media compliance solution should have a seamless process for ensuring that all social media posts are compliant with FINRA requirements across devices.

FINRA social media sweep

In this session, FINRA shared some results and learnings of the “social media sweep” conducted this past summer. Most firms reviewed were quite conservative in their use of social media but there were still some gaps in supervision and record-keeping. One important learning for firms that did have larger programs and middleware solutions to address compliance was that FINRA had a hard time reviewing and interpreting activity across multiple different data sources.

Key takeaway: Not only do firms need to keep records of social media activity, but records of posts or comments should also be easy to review in the context of the social activity.  

Overall, it’s great to be a part of the continued discussion over social media compliance, but it’s clear that firms still have a lot more opportunity to embrace this channel.

FINRA AdReg poll
Poll conducted in real-time at the 2014 FINRA Advertising Regulation Conference.

Based on a poll of the audience hosted by FINRA at the event, the majority of participants still report the clarity of regulations as the the biggest challenge to firms in adopting social media. Hopefully the clarifications from this session help firms get one step closer to adopting social media.

We have been working with insurance and financial services firms for almost five years, but we’ve still only seen the tip of the iceberg that is the opportunity for financial professionals on social media. More confidence in interpretation of the regulations should help firms move forward.

Compliant social business for financial services with LinkedIn’s new Sales Navigator

logo-linkedinToday, LinkedIn is making social business even easier with the launch of their new LinkedIn Sales Navigator, and we here at Hearsay Social are excited to enable financial services customers of both LinkedIn Sales Navigator and Hearsay Social with enhanced compliance and content publishing capabilities to support this new product.

Financial services professionals using the expanded features of the new LinkedIn Sales Navigator can rely on the same compliance and content support they’ve always enjoyed with LinkedIn and Hearsay Social.
Designed specifically for the sales professional, the new LinkedIn Sales Navigator combines LinkedIn’s network data, relevant news sources, accounts, leads, and preferences in a customized, stand-alone experience for your day-to-day sales needs. The new LinkedIn Sales Navigator leverages the power of LinkedIn’s 300+ million professional network to help sales professionals focus on the right people, stay informed on key updates, and build trust with prospects and customers.
So what does this mean for financial services professionals and particularly Hearsay Social customers? As part of LinkedIn’s Certified Compliance Partner program, Hearsay Social is helping to ensure that the new LinkedIn Sales Navigator will be ready for the financial services industry. We’ve been working with LinkedIn’s product team to ensure that all new features and functionalities on the new LinkedIn Sales Navigator are backed with Hearsay Social’s leading compliance platform.
Drawing on our deep experience in enabling social business for financial services, Hearsay Social will provide compliance capabilities for the new Sales Navigator. Existing customers should look for more information about using the new Sales Navigator in financial services in the upcoming months.
We’re incredibly excited to help bring the new LinkedIn Sales Navigator to the financial services industry. LinkedIn and Hearsay Social believe that social media represents an enormous business opportunity for our customers. By combining Hearsay Social’s advanced compliance and content delivery with LinkedIn, the largest professional network on the Web, financial services professionals will be able to better prospect, build sales relationships and grow revenue while enabling social media compliance.
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Unveiling a new dashboard and compliance enhancements to help you grow business on social media

Over the past several years, we’ve closely collaborated with the largest financial services companies in the world, honing in on the tools and strategies that best help advisors grow business through social media. We then took this knowledge and developed a best practices methodology that focuses on the essentials to being successful on social:

  1. Get found
  2. Grow your network
  3. Research and act on social signals
  4. Build credibility through thought leadership.

Today’s new social business dashboard from Hearsay Social directly incorporates this methodology through its interface and features. Key enhancements developed in the past year include:

  • Advanced compliance capabilities: Dedicated to serving financial services organizations, which are regulated by FINRA and the SEC, we’ve streamlined compliance and supervision–not only to help compliance teams but also to help advisors. Today we’re launching a seamless LinkedIn profile review and publishing experience through the Hearsay Social interface. Over the past year, Hearsay Social has doubled the information it collects for archiving from social networks, streamlined the user interface for supervision, and improved integration with industry-leading archiving tools, all to enable significantly more efficient compliance capabilities.
  • Advanced Social Signals: Through Hearsay Social’s unique Social Signals offering, which uses natural language processing to alert users to important life events of people in their networks, users can now track alerts and follow up on an individual level. This allows agents and advisors to effectively manage lists of current and prospective clients and respond to social signals at scale.
  • Enterprise-level integration: Hearsay Social has released new enterprise APIs, making it even easier for global businesses to integrate the Hearsay Social platform into their business-critical enterprise and compliance systems. This enables further customization with system-level integration for global companies and streamlines the deployment process, helping agents and advisors to start using social media more quickly.

Of course, we won’t stop there. Every day we work closely with the social networks, the regulatory bodies, and you–our customers–to continually improve upon Hearsay Social, the leading social business platform for the financial services industry.
Read the full press release here and learn more:

Social media compliance: What investment advisors need to know

Ed. note: The following post, authored by Yasmin Zarabi  (vice president, legal & compliance, Hearsay Social), originally appeared in Financial Planning.

FinancialPlanning_logoAs social media grows increasingly popular among RIAs, there are still questions regarding testimonials, endorsements and recommendations on social sites. The SEC’s recent guidance allowed for certain use of third-party commentary on social media that would not violate the “testimonial rule.”

Here’s what investment advisors need to know now.

Underlying rule

Since the 1940s, the SEC has forbidden RIAs from promoting client endorsements or testimonials in anything that constitutes an “advertisement.” Rule 206(4)-1 under the SEC Investment Advisers Act of 1940 prohibits an RIA from publishing, circulating or distributing any advertisement which refers — directly or indirectly — to any testimonial of any kind concerning the RIA or any advice, analysis, report or other service rendered by the investment advisor.
But in the digital age, clients can effortlessly use social media to endorse and recommend their advisors with just a few clicks. The SEC has issued a couple of clarifications related to social media. Back in January 2012, it published a National Examination Risk Alert on Investment Adviser Use of Social Media, outlining its concerns about RIAs’ use of social media and describing how clients can provide recommendations and endorsements. More recently, in March 2014, the SEC issued Guidance No. 2014-4 — Guidance on the Testimonial Rule and Social Media — providing further clarity on investment’s advisors’ use of third party commentary on social media.
How could a third-party comment or social media “action” be viewed as a “testimonial” on social media and therefore prohibited? One thing is clear: In its guidance, the SEC says an investment advisor should not invite its clients to post commentary directly on the investment advisor’s own social media site or page.

But what uses of third-party commentary would be permissible by the testimonial rule?

mzl.hcndxsjsLinkedIn recommendations & endorsements

LinkedIn endorsements and independent recommendations about the advisor’s skills should be avoided. An endorsement can occur in two ways: A client could endorse an advisor for a skill that is already listed on his or her profile or a client could initiate an endorsement for a new skill that does not already appear on the advisor’s profile.
To avoid the first scenario, advisors should select “No” for the “I want to be endorsed” feature under the “Skills and Expertise” section on their LinkedIn profile to turn off the feature that allows clients (other LinkedIn users) to “endorse” their skills. In addition, if a connection attempts to add a new skill to the advisor’s profile, the advisor should reject the endorsement to avoid violating the testimonial rule under the Advisers Act.
Recommendations on LinkedIn are completely separate from endorsements. They are free-form written opinions of one’s professional skills, accomplishments or experience. A client can choose to recommend an advisor or an advisor could request such a recommendation.
If advisors receive unsolicited recommendations, they have the ability to review and approve the recommendation before it appears publicly on their profile. Advisors should not accept or request any recommendations on LinkedIn. Advisors may also want to add a preemptive note to the Summary section of their profiles to say up front that they will not accept recommendations or endorsements.

Tweets

Advisors should avoid retweeting any tweet from either a securities research analyst or a client who is providing a testimonial about the advisor’s performance or a product or service of its firm.

LikeSocial media “likes”

Many firms also worry about the interpretation of a like on Facebook or LinkedIn, or having viewers choose to “favorite” a tweet. Likes can mean many things: For example, a like from a third party may simply indicate that a visitor enjoyed an article that was shared or appreciates the artwork on a page.
Much depends on context: The 2012 SEC Risk Alert was careful to state that interpretation of a like as a testimonial is based on the facts and circumstances. A like that an advisor solicits as an indication of a client’s experience with the firm may be construed as a testimonial. However, a like on a photo of an advisor’s new baby may not.

Links to third-party sites

The March 2014 SEC guidance also clarifies how advisors can use third-party commentary on social media. According to the guidance, advisors should not link to commentary on a third-party social media site unless they can demonstrate all three of these:

  • That the advisor has no ability to affect which public commentary is included or how the commentary is presented on the independent social media site.
  • That the commentator’s ability to comment is not restricted.
  • That all comments, both good and bad, can be viewed publicly.

Takeaway: rules for advisors

Financial regulations only prohibit the use of testimonials or endorsements that are related to financial services and the ability to manage money. But advisors can avoid violations of the testimonial rule by following these guidelines:

  • Do not list any skills on your LinkedIn profile.
  • Turn the LinkedIn endorsements feature off.
  • Do not accept any LinkedIn endorsements initiated by a third party.
  • Include a disclaimer on your LinkedIn profile instructing third parties not to endorse.
  • Only share links to independent third-party social media sites on which you have no influence on the third-party commentary and you are not materially entangled with the third-party social media site.
  • Do not cherry-pick favorable client testimonials or endorsements  on your social media pages or any advertisement. If you allow testimonials, you have to show the good and the bad commentary, and not just the favorable comments.

In general, advisors should avoid soliciting client feedback in a way that may frame a Facebook like or a third-party post as a testimonial.
And as a best practice to limit their risks, advisors should prominently display language on their LinkedIn and Facebook profiles indicating that they (and their firms) are not responsible for and do not encourage third parties to post anything on their behalf.
Given that the financial regulations relating to social media are relatively new, and social media platforms continue to evolve in their uses and the ability to effect controls, firms should consider the guidance in light of their organization’s policies for their advisors.

Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.

Financial services leaders from Goldman Sachs, JPMorgan Chase, and Wells Fargo to join Hearsay Social at LinkedIn FinanceConnect

Content and conversations fuel the customer journey in the age of social media. Strategic content marketing drives deeper connections with your customers, which ultimately drives more business.

Next Thursday, May 2, at LinkedIn FinanceConnect, executives from the financial services industry, including Claire Huang (CMO, JPMorgan Chase), Lisa Shalett (Head of Brand Marketing and Digital Strategy, Goldman Sachs), and Rachel Perkel, (SVP, Head of Wealth Management Marketing, Wells Fargo Bank), will join Silicon Valley leaders LinkedIn and Hearsay Social to discuss how to use content to best leverage social sales and marketing.

Whether you’re seeking to understand how to balance social media rewards or risks, concerned about traversing the social media regulatory landscape, or just interested in the LinkedIn Influencers program, the LinkedIn Marketing Solutions team has prepared a stellar event.

If you’re attending, be sure to catch Hearsay Social on the following panels:

Compliance track: 2013 Regulatory Landscape  (3:15 – 4:00 PM)

  • Yasmin Zarabi, Senior Director of Legal, Hearsay Social
  • Joe Price, Senior Vice President, Corporate Financing/Advertising Regulation, FINRA
  • Iain Duke-Richardet, Director – Head of Technology & Licensing Compliance, RBC
  • Sean Shore, Manager, Business Conduct, National Bank Financial Wealth Management
  • Lisa Shalett, Head of Brand Marketing and Digital Strategy, Goldman Sachs

Navigating the social media regulatory landscape can be daunting, especially for global firms. In this session, we will discuss the current state of social media compliance and how innovative compliance organizations can evolve to stay ahead of future regulatory and technology changes.

LinkedIn Influencers Roundtable (4:00 – 4:45 PM)

Only four months old, the LinkedIn Influencer program delivers fresh and frequent content to our insight-hungry member base. Three of our most prolific influencers join us to discuss the impact that the combination of content, social, and the professional audience has had on their lives and businesses.

Compliance track: Path from Compliance to ROI (4:00 – 4:45 PM)

  • Michael Lock, COO, Hearsay Social
  • Knut Olson, Senior Vice President, Financial Network, Thrivent Financial for Lutherans
  • Paul Johnston, Vice President and Deputy General Counsel, Thrivent Financial for Lutherans

Many firms get started in social media in order to manage risk, but with the appropriate policies and processes in place, LinkedIn is a valuable asset to the field organization. How do successful firms make the transition from social media compliance to ROI?

Social media compliance updates from FINRA’s Advertising Regulation Conference

As announced last June, new FINRA Communication Rules, including FINRA Rule 2210 (Communications with the Public), have been approved by the SEC and will take effect February 4, 2013.  These rules, and related regulatory notices, provide important guidance for firms on blogs and social networking websites.
At the most recent FINRA Advertising Regulation Conference in Washington DC, Hearsay Social heard FINRA and industry experts provide useful updates and clarifications on Rule 2210 and social media compliance.
Some of the key topics covered include:

  • Pre-review requirements: Does a registered representative’s first social media post or their first interaction in a new conversation need to be pre-reviewed by their firm?
  • Deleting third-party comments: If a firm deletes third-party comments from its social media site, does that imply that it is has endorsed the remaining comments?
  • Third-party content: What are a firm’s obligations when a registered representative tweets a link from a business social media site to an article on an independent, third-party website?

Pre-review requirements

Across the financial services industry there has been an open question about whether dynamic content needs to be pre-reviewed. Reaffirming Notice 2210 at the conference, FINRA said there is no requirement for the pre-review of social media interactions.
The SEC-approved “Communications Rules” lay out an exception to the preapproval requirement for social media: firms and reps will not need to have a principal approve the content of a status update, post, or tweet prior to it being posted on an online interactive forum such as a LinkedIn group, Twitter feed, or Facebook page. Additionally, tweets and posts are not considered static content under 11-39 and therefore need not be approved.
Hearsay Social has and will continue to offer pre-review solutions for organizations seeking an extra level of security and as always the supervision and retention/retrieval of all social media communications are standard.

Deleting third-party comments

At the conference, FINRA representatives said that deleting a third-party post from a firm’s sponsored social media pages does not mean that the firm is endorsing the remaining comments. Firms are responsible for the supervision and retention of all comments, including deleted comments, but it is up to their good judgment in deciding which comments need to be removed.
It was also mentioned, however, that firms only deleting negative comments (and leaving all positive comments) could face repercussions. For this reason, comment deletion should be an action reserved for very specific scenarios in which the firm finds posts to be illegal, unprofessional, or inappropriate. The ability to delete concerning content is important for protecting a firm’s brand and to aid in this effort.
Hearsay Social offers real-time remediation functionality, automatically removing content that contains a specific keywords or phrases and maintaining a record of any deleted conversations after removing them from the public site.

Third-party content

In the case of a representative publishing a link to a third-party article, FINRA advises that the rep’s organization is responsible for the content in that article.  The organization is not responsible for the entirety of the content available on that site hosting the article, but it should be aware of what the specific article contains.
Hearsay Social offers a number of workflow and approval solutions that allow organizations to review articles and other content prior to being published by representatives of the organization.
The FINRA Rules, coupled with the information presented at the conference, indicate that the FINRA staff has a continuing and evolving grasp of the real-time nature of social media. We believe these updates allow organizations to better empower their employees on social media while remaining compliant.

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.

How do LinkedIn Endorsements affect financial advisors and representatives?

Does LinkedIn’s new Endorsements feature, which allows people to endorse the skills of others, present issues for Broker/ Registered Agents pursuant to Rule 206(4) of the SEC Investment Advisers Act of 1940?
Rule 206(4) states that advertisements cannot “use or refer to testimonials” (which include any statement of a client’s experience or endorsement). This is true of advertisements in print materials and advertising on electronic forums such as LinkedIn profiles.
An endorsement or recommendation from a client could be regarded as a violation of the Advisers Act.
SEC’s staff has consistently interpreted testimonials to include a statement of a client’s experience with, or endorsement of, an investment adviser. Therefore, we believe that through the use of “social plug-ins” such as the “Endorsement” feature could be a testimonial under the Advisers Act. If your organization concludes that such legal or compliance risks require monitoring or supervision of the new endorsement feature, the Hearsay Social platform can support that objective as described below.
LinkedIn Endorsements occur in two ways. The first is an endorsement on a LinkedIn skill that already exists in a member profile. The second is by a third party initiating an endorsement for a skill that does not exist on a member profile.
In the first case, it is not yet possible for a software solution to block a third party initiated endorsement on a pre-existing skill. If an organization does not want to allow skills and endorsements, however, we suggest creating a policy prohibiting representatives from adding skills to their own profiles. Organizations can monitor whether representatives stray from this policy through various software solutions like Hearsay Social.
In the second case, if a third party initiates an endorsement, the representative of your organization must accept this endorsement prior to it surfacing as a skill on their LinkedIn profile. If an organization does not want to allow skills and endorsements, we would encourage the organization to set a policy prohibiting representatives from accepting endorsements. Again, solutions like Hearsay Social can detect all newly listed skills on LinkedIn profiles.
Finally, for endorsements that may have existed prior to a policy being in place, we suggest that brokers and/or agents hide endorsements that already have taken place (see illustration below showing how to hide endorsements) and to use the Hearsay Social Compliance solution to identify anywhere these skills/endorsements may be listed.

As always, you should consult your own legal advisors as to the application, if any, of these or any laws or regulations restricting advertisements and other communications with the public to your business.

Hearsay Social handles skills and endorsements as we do all other areas of compliance, as this functionality is supported via the LinkedIn API.

If you have any additional questions about LinkedIn endorsements, please feel free to leave a comment below or contact us directly.

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.

The new LinkedIn homepage redesign: Hearsay Social Compliance has you covered

In the biggest social media news of the past month, LinkedIn just announced that it is rolling out a completely redesigned homepage, making the experience simpler and more visual than ever.
As LinkedIn explained earlier this week, the new homepage has been designed to be cleaner, more efficient, and more valuable for users seeking the latest professional news and trends, updates from their connections, and recent job changes in their network. In addition, the stream is more social than before, as you can now like and comment on everything you see, whether it’s a timely news item or update from a friend.

“We’ve revamped the entire Homepage experience with a new look and feel to make it easier to scan and find the information that matters most to you,” said LinkedIn Product Manager Caroline Gaffney. “This simpler and cleaner design makes it easier to navigate the page and quickly find the updates you’re looking for.”
We at Hearsay Social are excited to see the largest professional social network in the world refreshing its products to be more visual and engaging, and we can’t wait to see the changes roll out to more users.

Hearsay Social support for the LinkedIn homepage redesign

As always, you and other Hearsay Social customers can rest assured that the Hearsay Social platform supports LinkedIn’s changes from day one. Instead of using proxies that can break anytime LinkedIn makes minor or major changes to the site, we integrate directly into LinkedIn APIs, ensuring that our technology doesn’t suffer a single hiccup.
Effective immediately, corporate marketers can still use our Social Marketing Module and Content Exchange to manage content across hundreds and thousands of LinkedIn profiles. Salespeople can still use our Social Sales Module for one-click publishing of content and campaigns. And while all that’s happening, compliance officers and IT staff don’t have to take any additional action, trusting that our Social Compliance Module and Social Enterprise IT Module will continue running like clockwork.
Far from just a place for recruiters and jobseekers, LinkedIn has quickly evolved into the go-to hub for all the news, information, and updates for professionals and businesspeople. Because of that, Hearsay Social is proud to power your updates to LinkedIn, in addition to all the other major social networks.
LinkedIn says the newly redesigned homepage will roll out to members over the next few weeks, so head to LinkedIn now to see if the redesign has launched for you. Also, read the full official announcement on the LinkedIn blog.

Leading financial firms building valuable and compliant relationships with Hearsay Social

Over the last two years since our founding, we have focused on two industries specifically built on relationships: Financial Services and Insurance. Advisors, agents, and other representatives build their entire businesses on forming and developing person-to-person relationships. Relationship businesses are the perfect use case for social media.
That’s why I’m so excited to reveal today that Hearsay Social is powering the top financial services firms on social media, including Northwestern Mutual and Thrivent Financial for Lutherans, in addition to top insurance companies like California Casualty and Farmers Insurance Group. These forward-thinking organizations aren’t just launching experimental corporate pages, they are transforming their businesses from the firm to business unit to representative — and in so doing, building reputation, referrals, and loyalty among clients.
In short, they share our vision for the transformational power of social media for relationship-building in the Facebook era. Supported by Hearsay Social’s complete FINRA/SEC compliance capabilities and empowered by our easy-to-use social marketing platform, financial advisors and firms can now safely and fully embrace the ROI of sites such as LinkedIn, Facebook, Twitter, and Google+.
With so many customers in regulated industries, we’ve been committed since our founding to delivering complete compliance and complete coverage to the world’s largest financial organizations. In fact, our platform has already helped reduce the workload on compliance teams by 50%. That means your employees have even more time to focus on doing real business, which includes connecting with customers and prospects on social media.
I am also thrilled to be announcing today additional regulatory functionality to provide even greater efficiency to compliance teams (you can read the details here):

  • Continuous monitoring and real-time remediation for infractions
  • Full mobile compliance coverage
  • Support for posting from any access point
  • Capturing and archiving for LinkedIn Groups
  • Dynamic hierarchies for fast-changing organizations
  • Compliance management

Many thanks to our financial customer consortium which helped us develop and design these key new capabilities. We are thrilled to partner for your success, and so glad to hear you feel the same way.
Kyle Marie Woods, Marketing Strategist at Thrivent Financial, sums it up pretty nicely: “Our partnership with Hearsay Social gives us added peace of mind that we’re compliant with regulatory requirements which allows us to focus on maximizing the power of social media at a local level.”
Keep the great ideas coming and we will keep delivering the innovation.
Read our full announcement. And check out Northwestern Mutual’s announcement too.