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3 strategies to overcome social media challenges in wealth management

Article first appeared on thewealthnet on Tue, Dec 9, 2014.

logoThe wealth management industry has been slow to embrace and understand how to harness the power of social networks in their organizations. However, with a billion people on Facebook and 200 million on Twitter and LinkedIn each, there’s no question that your customers – both young and old – are already there. Clients today expect their advisors to interact more often, to offer them more personalized service and to communicate when and where they want.
A recent 2014 survey by PAM Insight of financial advisors shows that, compared to last year where only 67.9% used Linkedin, this year that number has increased to 83%. The other network that was mentioned was Twitter with 54% having corporate Twitter accounts. The future also seems bright for social media initiatives with over 72% planning to increase spend in the next year.
Hearsay Social recently had the opportunity to dig behind these numbers when it partnered with Financial Services Forum to host a meeting with heads of marketing from some of the largest wealth management firms in UK. A roundtable discussion on the state of social media and the challenges facing this industry brought to light three key challenges and strategies to overcome perceived barriers:


When it comes to the biggest barriers in adopting social, compliance and risk took center stage. PAM Insight reports that “as with previous year’s survey, 66.7% of advisors stated compliance as the main concern.” But the problem here was less about specific requirements and more about the fact that there is no clarity on what the rules are, which has paralyzed many companies into taking no action.
Recent guidelines from FCA were applauded by the group to be a move in the right direction but there were still a lot of questions on what FCA will and will not accept. There was agreement that the industry can’t wait indefinitely for the rules to be clear, so companies should start by implementing some basic social media strategies:

  • Provide advisors with a pre-approved library of content
  • Enable a workflow to automate content approval
  • Adopt a third-party system to capture social conversations and archive it.


Another area that sparked a lot of conversation amongst the group was content. How do you differentiate your content from your competitors? How do you ensure that your content is not “spam” for your customers? And, more importantly, how do you shape the conversation on social media?
This concern was consistent with PAM Insight’s finding that showed 64.3% of respondents were concerned about lack of control on what content is communicated. After much discussion on this topic, attendees agreed that the best strategy to overcome content issues is education. Education on how to represent yourself online in a manner that is true, trustworthy and personal. Education on the right type of content for the right audience. And education on regulatory risk and social media policies of the company.


Most participants feel that social media moves too fast. If you want to be on social media channels, you need to be prepared to respond in time. Many people spoke about the compliance process and the length of time it takes, often making social conversations less relevant by the time they are ready.
Since introducing any change takes time, it is imperative that companies start now to understand what social media can do for them and take incremental steps to help their people build relationships online. Creating cross-functional teams with marketing, sales and compliance and educating themselves on how social media works are a couple strategies that can help with timeliness and embracing these new channels of communication.
Overall the impact and benefits of social media dominated the conversation. This is again in line with the survey results of PAM Insight. The survey showed that 61% of advisors believed “building industry presence and credibility” was the biggest benefit. While 44% said attracting clients and retention of existing clients (80%) were important benefits of social media.

New proposed social media compliance rules announced by the FFIEC

On January 22 2013, the Federal Financial Institutions Examination Counsel (FFIEC) issued proposed guidelines entitled “Social Media: Consumer Compliance Risk Management Guidance” (Guidance).
In response to requests from industry and consumer groups, this policy document outlines potential social media risk for supervised entities (including banks, savings associations, credit unions, mortgage lenders, and other nonbank entities supervised by the Consumer Financial Protection Bureau) and provides guidelines for how organizations should manage those risks. Once finalized, supervised entities will need to follow the Guidance and the FFIEC will encourage state regulators to adopt the Guidance into law.
To get ahead of this change, such entities will need to ensure that their policies and practices on social media (LinkedIn, Facebook, Twitter, etc.) commensurate with the Guidance. Thankfully for many institutions addressing similar risks to FINRA, SEC and other regulations on communications, the FFIEC is another government agency confirming the need for oversight and control over financial institutions communications on social media. While this Guidance is more detailed than existing regulations, it addresses similar risk areas.

Key takeaways from the proposed guidance

Implement a social media policy & procedure
As part of their overall “Risk Management Program,” governed entities should have a clear and concise social media policy that includes a governance structure, outlines clear roles and responsibilities for all parties involved, and aligns social media with the strategic goals for the institution. The policy should also include an employee training program, identifying the controls in place for the use and monitoring of social media as well as procedures for audit and compliance.
At Hearsay Social, we encourage financial institutions to approach social media with a thoughtful combination of policy and technology. As suggested by the FFIEC in this Guidance, it is important that this policy outlines the strategic value of social media for the organization and how employees should use social media for business purposes.  The training and enforcement of this policy is almost as important as the policy itself.
Reporting of effectiveness of the social media program policy
The FFIEC requests regular reporting to the financial institution’s board of directors or senior management on the effectiveness of the social media program and whether the program is achieving its stated objectives.
As with any outbound initiatives, it is important for organizations to continually refine activities and measure return on investment.  With a software solution like Hearsay Social, financial institutions can easily monitor and measure their effectiveness on social media and report on compliance.
The covered institutions should have an oversight process for regularly monitoring social media posts, including those generated by third parties engaged to provide social media services for such institutions, to ensure compliance with all applicable laws and regulations.
Hearsay Social offers flexible governance solutions for organizations to build monitoring and review processes that meet their needs; as always, the supervision, retention, and retrieval of all social media communications is a standard requirement for FINRA and SEC governed organizations. For institutions seeking an extra level of security, Hearsay Social offers controls so employees can only publish pre-approved content to social media networks.
The FFIEC is requesting comments on the proposed Guidance. Specifically, FFIEC is seeking feedback on the following questions:

  • Are there other types of social media, or ways in which financial institutions are using social media, that are not included in the proposed guidance but that should be included?
  • Are there other consumer protection laws, regulations, policies or concerns that may be implicated by financial institutions’ use of social media that are not discussed in the proposed guidance but that should be discussed?
  • Are there any technological or other impediments to financial institutions’ compliance with applicable laws, regulations, and policies when using social media of which the Agencies should be aware?

Comments on to the proposed Guidance can be submitted to the Federal eRulemaking Portal by March 22. The Docket ID “FFIEC-2013-0001” must be included with the comment.
The Guidance can be found here.

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.