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Improving efficiency and protection with new social media compliance enhancements

As head of legal and compliance at Hearsay Social, it is important to me that we continually provide cutting-edge improvements to the Hearsay Social platform to make the jobs of our compliance and supervision users easier.
Today we announced new enhancements to our compliance capabilities, and I want to share some of the key focus areas for these enhancements.

Streamlining the review and publishing process for static content

Request-Changes-to-Profile-Teal_NEW (1)FINRA sees social media profiles as “static” content and categorizes this content as “advertisements,” meaning profiles require pre-approval by a firm’s principal before they are published. Because we know this review process is a heavily used area of the Hearsay Social platform, we’ve created a new streamlined social profile review, approval, and publishing solution to make it even easier and more efficient for financial professionals to publish compliant profiles.
Many of our customers in highly regulated industries are already using this new profile solution, and I’m happy to report we’ve received extremely positive feedback. With one of the first implementations of the new LinkedIn API, Hearsay Social can now automatically publish approved profile content directly to the network. For supervision professionals, this new functionality ensures public profiles match what they have approved, minimizing risk for the organization and easing compliance for profiles. Plus, it saves advisors and agents the time and headache of having to update their profile manually after new content has been approved.

More pre-approval functionality for dynamic content

We heard from some of our customers that they wanted a better way to pre-approve dynamic social activity from advisors and agents. With recent enhancements, Hearsay Social now lets supervisors pre-approve social engagements such as Likes or comments before they go live on the social networks.

Archive support for photos

An effective social business program is not just text-based. In order to help our customers take advantage of all types of social content, we now provide the ability for firms to archive photos posted by agents and advisors through the platform. This ensures they’re capturing this type of activity in their records, even if it is deleted or removed from the social network at a later date.

Increasing context for improved efficiency

In addition to delivering a new static profile solution, we have added more note and attachment fields so supervision users can share comments or context with each other or advisors during the supervision process. These new fields are also pushed to the archive systems so that complete context is available upon record review. In addition, Hearsay Social now provides enhanced searching and sorting to supervision users so that they can be even more efficient when reviewing or auditing social business activities of agents and advisors.
We hope these enhancements will make our customers’ jobs easier and their social business programs more effective and compliant. Please feel free to reach out to me directly if you’d like more information about the new solutions above or other functionality of the Hearsay Social platform.
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Advisor use of social media matures, regulatory requirements are still a challenge: Recap from #SIFMAsocial

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Last week we attended the sold out SIFMA Social Media Seminar in New York City, a one-day event in the heart of Wall Street that brings together experts from a variety of business roles including marketing, business, compliance, and legal, as well as financial advisors, to discuss the expanding use of social media for financial services.

Major themes from the conference included:

  • The financial services industry has greatly advanced its use of social media in recent years, but there is still a lot of opportunity for social media to impact the business.

  • Interpreting regulatory and compliance requirements continues to be a challenge for firms and financial professionals.

  • Social media can be a truly valuable tool for advisors and branches to build their business, especially if they leverage it to expand their client base in a target niche.

Michael Lock (President & COO at Hearsay Social, @michaelhlock) kicked off the seminar with a lively perspective on technology trends and how consumer expectations are changing. In his session, Michael shared some ways in which financial professionals are using social media to build customer relationships. Harking back to a lesson familiar for every good salesperson, he reminded us that social media is about listening first. OnWallStreet author Andrew Welsch (@AndrewWelsch) published a great recap of Michael’s session here.

Here are more key takeaways from the event:

Updates from the social networks

The next session was a panel moderated by Mike White (CMO at Raymond James, @MikeRJF) with financial services industry leaders from LinkedIn, Twitter, and Facebook. Mike set the stage with learnings from a roundtable conversation that a group of SIFMA members had shared the day before: “We’ve come a long way over the past few years, but there is still a lot of opportunity,” he said, however, noting “the importance of not looking to social media as a standalone panacea. […] The most successful advisors and firms are looking at it as a piece of an overall marketing program.”

The following conversations from the respective social networks followed these same themes. Some of their insights included:

  • Brad Murphy (Client Partner, Financial Services Vertical at Facebook) described how the Facebook platform has evolved over the past 18 months. Although many business owners have seen a decrease in the organic reach of their pages, Facebook has greatly expanded its targeting ability with its evolving advertising program. Brad specifically referenced new data partnerships, such as with Acxiom, that help financial professionals reach exactly the audience they’re targeting.

  • Jennifer Grazel (Head of Category Development, Financial Services at LinkedIn, @jgrazel) provided insight into the core pillars of focus for LinkedIn: “identity, network and knowledge.” She also explained how the network’s continued push into content publishing and sharing is intended to support the “knowledge” pillar. In addition, she said that LinkedIn’s acquisition of Bizo will support the company’s plans to enable marketers to run nurture programs.

  • Michael Wong (Head of Financial Services at Twitter, @mw145) said that when it comes to content, timing and quality is more important than frequency and volume, citing Vanguard and Motley Fool as two organizations that excel at sharing good content during volatile times. He also predicted that, going forward, the focus will be on developing a mobile experience for end users as well as better analytics to measure effectiveness of campaigns and activity.

Static vs. dynamic content and other regulatory requirements

In the second panel, “Navigating The Web of Social Media Regulation,” Rick Apicella (Morgan Stanley Wealth Management), Thomas Selman (FINRA), Doug Preston (Bank of America Merrill Lynch), and Melissa Callison (Charles Scwhab) discussed the regulatory requirements that govern social media use.

Selman, who is responsible for advertising policy at FINRA, summarized how the regulatory authority thought about social media. They “took a principles-based view of social media,” he said, in order to write regulation that would not have to be changed every time the technology changed. And they “tried to leverage existing rules and terminology” wherever possible instead of introducing new terms. This approach lead to FINRA Regulatory Notices 10-06 and 11-39, which directly address social media.

Supervision and review requirements for social media address two key content categories: “static” content and “dynamic” content. FINRA requires that all static content be pre-reviewed before it is published, and therefore what is categorized as dynamic or static is often a hot topic in conversation amongst legal and compliance professionals.

At this event, Thomas Selman notably commented that “a case can be made for why a tweet is considered dynamic content.” Somebody from the audience even asked him to repeat this because this opinion was in contrast to other interpretations of the regulation that we’ve heard.

“Content is king, and context is queen”

After spending the first half of the day discussing mostly advisor use of social media, the panel “Social Media Strategy & Use at the Corporate Level” specifically zeroed in on corporate and brand use of social media.

Ruth Papazian (HD Vest Financial Services) moderated a discussion with Joe Corriero (Bank of America Merrill Lynch), Kraleigh Woodford (UBS Wealth Management Americas), Jon Pauley (Ameriprise Financial), and Melissa Socci (LPL Financial). This conversation kept coming back to the importance of content, with each team member describing how their respective organization sources, develops and distributes content.

It was especially interesting to hear how firms of different sizes deal with the challenges of creating social content. Joe Corriero, for example, said that Bank of America Merrill Lynch created a “social media newsroom,” which is a regular meeting bringing together all the disciplines (including research, marketing, legal and compliance) to brainstorm and plan their content timelines. And sometimes internal teams aren’t enough. For example, Melissa Socci explained that they occasionally turn to contractors to create additional content pieces like infographics for social media because their traditional, print-first content team doesn’t have quite the right skillset for that. With a much leaner team, Ruth Papazian and her team rely upon the integration of Trapit and Hearsay Social to curate a regular stream of social media content.

Kraleigh Woodford from UBS Wealth Management Americas pointed out that, in additional to the common adage “content is king,” “context is queen.” Kraliegh argued that “it’s the ‘why do I care’ factor” that leads to successful social content. Companies don’t have a shortage of content but they have to be thinking about what people want to consume through social media; feeding them the wrong content, like “linking to a 60-page report,” might not be the be the most effective strategy.

When it comes to a corporate presence and approach to social media in financial services, Melissa Socci said it best: “We are not social media marketing, we are marketing in a social media age.”

Social media strategies for financial advisors and client communication

In the second panel moderated by Mike White (CMO at Raymond James, @MikeRJF), five financial advisors representing Raymond James Financial, Wells Fargo Advisors Financial Network, Ameriprise Financial, LPL Financial, and Robert W. Baird & Co. shared some of their most successful social media strategies for enhancing communication with clients and prospects.

One theme that stood out? Each of the panelists has found success using social media a little bit differently–depending on their target clients, location, and team structure.

Evan Shear (Branch Manager with Raymond James Financial) uses social media to stay up with what is happening in the lives of his client. One anecdote he shared: he saw via social media that his client had lost a family pet, and so he sent a thoughtful sympathy card and gift. Fueled by what he learns through social media, according to Evan, this type of activity strengthens client relationships and builds deep client loyalty.

Charles Camilleri (Financial Advisor with Ameriprise Financial Services) uses social media to stay top of mind and to get the word out to his extended network that he is a financial advisor. Within a week of using social media for business, Charles got a new client referral from a friend of a friend, simply due to the fact that they learned Camilleri’s profession after connecting on LinkedIn.

In addition to the financial advisors on the panel, Dan Swift (Director of Financial Services at LinkedIn, (@danjswift) shared insights into social selling and some of the exciting functionality that LinkedIn Sales Solution provides to help financial professionals. Dan described how LinkedIn Sales Navigator solves for the “now what?” feeling that often accompanies users who are new to social media. He recently spent three months on the road training 160 advisors on social selling with LinkedIn, and they saw some amazing success. Within that same time period, a subset of those financial professionals won over $100 million in new investable assets–impressive ROI for a program that was just getting started!

With the various success stories that can be correlated to a social presence, we think financial professionals would do well to take advice from one other participant on the panel, Jamie Cox (LPL Financial): “You don’t have time to not be on social media.” We would agree.

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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.

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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.

FINRA compliance panel recap from LinkedIn's Global Financial Services Summit

This week, Hearsay Social had the honor of running the compliance track at  LinkedIn’s Global Financial Services Summit in New York.

We were delighted to host Joe Price, Head of FINRA’s Social Media Task Force, along with Lisa Shalett, CMO of Goldman Sachs; Iain Duke-Richardet, Head of Technology Compliance at Royal Bank of Canada; Sean Shore, Business Conduct and Compliance Manager at National Bank Financial Wealth Management; and our very own Yasmin Zarabi, Compliance Officer at Hearsay Social for an interesting dialogue about the role and future of social media regulation in the industry.

LEFT TO RIGHT: Lisa Shalett, Iain Duke-Richardet, Sean Shore, Joe Price, and Yasmin Zarabi.

Yasmin kicked off the day with a discussion on how organizations must balance the regulatory risk of social media with the clear opportunity for social to support the financial organization. Joe Price then provided an overview about FINRA’s social media regulation.  As a part of this, he clarified the difference between ‘static’ and ‘dynamic’ communication, reiterating that profile pages are static and status updates, tweets, and photos are considered dynamic.
Lisa is a huge advocate for social networking. She is head of brand and digital now, but her prior role as head of compliance and legal at Goldman Sachs gives her great context and credibility to speak on these topics. “There is a huge opportunity with social media,” she said, “if you become an expert now, you have the first mover advantage.”  Lisa continued to stress the opportunity for compliance professionals that embrace social media. She compared the opportunity to email, saying, “it was not long ago that email was innovation.”  And, Lisa suggested that because of the high-visibility of social media, compliance professionals willing to learn social would immediately get themselves a spot at the leadership table. Moreover, Lisa challenged the audience– what is the risk of NOT doing social media?
While the panelists had interesting perspectives and debated many issues, there was mutual agreement around the enormous business opportunity on social media. As long as financial firms and their employees adopt the appropriate policies, procedures, and technology, social media can be incredibly valuable for organizations to stay relevant and drive business in this new era.
See below for more photos and tweets from the event:
LEFT TO RIGHT: Yasmin Zarabi, Joe Price, Sean Shore, Iain Duke-Richardet, and Lisa Shalett.

https://twitter.com/SethSuntha/status/329981597543706624


See more from the event:

Live from FINRA Ad Conference: FINRA Rule 2210 is coming

This morning Kevin Eversen and I attended the General Session of the FINRA Advertising Regulation Conference in Washington, DC.
Panelists included Tom Pappas (VP of Advertising Regulation at FINRA and co-author of the regulatory notices on social media 10-06 and 11-39), Tom Selman (EVP of Regulatory Policy), Joe Price (SVP Corporate Financing/Advertising and co-author of the Notices 10-06 and 11-39), and Joe Savage (VP Investment Companies Regulation).
The session kicked off with some interesting stats related to the conference and social media:

  • 470 paid attendees.
  • Entire FINRA advertising staff is here.
  • Social media is the topic that received the most attention for the second year in a row.
  • In addition to Day 2 General Session, the Nuts and Bolts panel will have info on social media/electronic communications. (Stay tuned!)
  • New panel added on how marketing and compliance departments can work together. (Content will likely mirror the WOMMA conference at which I’ll be speaking later this year.)
  • Due to demand, increased number of social media vendors this year.

The panel then transitioned to updates on the consolidation of NASD and NYSE Communications Rules, which we reported in a Financial Advisor Magazine article last month. As a result of the Dodd Frank Consumer Protection Act, deadlines have been imposed on the SEC to pass rules more quickly.
The big news is that the SEC is expected to pass FINRA Rule 2210 next week, which will combine NASD Rule 2210 and 2211 and their interpretive materials. The new rule lays 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/Twitter feed or Facebook Wall. This rule change would essentially codify the positions laid out in Regulatory Notice 11-39.
Notably, yesterday Morgan Stanley Smith Barney’s Director of Social Media, Lauren Boyle, and Socialware’s Chad Bockius discussed their take on FINRA Rule 2210 in a webinar.
Boyle was quoted as saying, “’We consider every tweet to be static content requiring preapproval at this point.”
Today, FINRA disagreed with that analysis: the panelists went on record to confirm that tweets and posts are indeed not considered static content under 11-39 and therefore need not be preapproved. Many thanks to FINRA for definitively answering the question we’ve been asking. (Find our analysis on this from the recent CEFLI/NAIC/FINRA social media forum here.)
Hearsay Social has the workflow technology to route and timestamp the approval of each and every post should a customer want to keep tighter controls on their advisors than is necessary under FINRA’s rules. Preapproval of both static and interactive social media communications, however, requires tons of resources and a huge time commitment from firm principals and the compliance department. Such a policy would make widespread adoption by reps and advisors less likely and detracts from the timeliness of posts (and ultimately the business value that social media networks can provide). With FINRA’s clarification today, it is unlikely that many other firms will require that posts and tweets be preapproved.
More on the social media panel coming tomorrow.

Kevin Eversen and Ally Basak Russell at the FINRA Advertising Regulation Conference