February 24, 2014

It comes as no surprise the adoption of social media has created many grey areas in the rules and interpretation of regulation and compliance. Social media profiles on LinkedIn or Twitter accounts can be seen as advertising for professional services, and in FINRA's view considered equivalent to a poster or flier that needs to be peer reviewed and documented by compliance officers.

A compliance officer must be notified of all changes to social profiles including "likes," endorsements, connections and comments. "That's one of the toughest things to deal with at large scale," says Bruce Milne, chief marketing officer at Socialware, a social business solution provider for regulated industries.

Due to the onerous archiving and compliance requirements the great majority of financial firms choose to stay out of the social sphere, but ING US (soon to be VOYA Financial) is taking on the challenge. In collaboration with Socialware, ING recently announced it will begin to roll out of LinkedIn profiles for its 2,400 financial advisors.

Strict Compliance

"We had a very strict policy in place," explains Ann Glover, chief marketing officer for ING US. "Our financial service advisors were not able to use LinkedIn until we could figure out a way for them to use it in a compliant manner."

Now, after a successful pilot with 10 users, ING is opening the program to a waiting list of over 100 advisors by year end. Word of mouth has spread quickly and Milne reports several inbound calls each day from advisors interested in joining the wait list.

From a business perspective, Glover says LinkedIn is an ideal place for advisors to manage relationships with current and prospective clients and to keep in touch as clients go through life events. "Only about 40 percent of the workforce is prepared for retirement," she says, "The direct demographic of LinkedIn is the target of ING, largely around preparing for a predictable and secure financial future."

Glover doesn't seem to worry about the chances of advisors being approached by recruiters who patrol LinkedIn for new hires, and says that because most of their industry peers do not allow advisors to use LinkedIn it is considered an attractive employee benefit.

Building the Guardrails

Unlike Facebook, LinkedIn's terms of service dictate users not have more than one account. Also unlike Facebook, FINRA's interpretation of LinkedIn is the site is intended for business purposes only. The actions of the users therefore reflect the opinions and recommendations of their firm.

Imagine, for example, an advisor has a laugh over an article about a survivalist who moves all their cash assets to gold and farmland, he hits "like" to share with his connections in good humor. A client could read that article and take the advice, however ridiculous. Legally there would be nothing to stop a client from going back to the firm and making a plausible case they received bad advice from the advisor. The same follows for a retweet on Twitter or repost on Facebook -- they are all motions of endorsing from the point of view of the advisor.

"You can't safely use "like" features with tongue in cheek," explains Milne. "There's no sense of irony in a like, so a lot of firm want to preclude users from using that feature."

To accommodate these unique needs of the financial service industry Socialware recently announced it has collaborated with LinkedIn to extend their programming interfaces, allowing firms to build guardrails that disable certain "risky" features. "We work with LinkedIn to act on behalf of our customers, advocating for the API published fields they need."

Through the interface, which acts as a proxy between the network and advisor, firms can publish a preapproved and recorded profile in full instead of going through the user interface line by line, saving time and stress for compliance. Disclosures can also be embedded into profiles that decrease the risk of participation. Depending on the firm's appetite for risk, guardrails may prevent users from making endorsements, which are also considered to be a recommendation by the advisor's company.

"When advisor accepts changes, makes an edit or presses submit, it goes in to compliance for approval," he explains. "Compliance need tools to make sure they aren't making unapproved changes to the profile, and they need a system to catch unapproved changes at enterprise scale."

One of the other things that's messy about LinkedIn and worked into the interface, says Milne, is you cant stop others from endorsing you, even if the skill is completely unrelated to the field. "It's a goofy deal that sets a lot of compliance officers off … We're working with LinkedIn so advisors and compliance can decline a skill. And if they are there we can suppress them so others can't see."

He adds that according to the regulations users can not be put out a compliance for a third party aspect. "If something is written on your wall that you don't like, nothing precludes you from deleting it, and nothing puts you out of compliance for having it there. It's neither your fault nor responsibility. They can go ahead and delete but it will be archived."

Pre-Approved Content

So what else can advisors do within the confines of preapproved liking, sharing, posting and endorsing?

As Milne puts it, you can't just send users out into the wild and hope they're productive. There are two essential elements to building an ecosystem around advisors: Support from readily available compliance officers who can approve posts in a timely manner, and a marketing team to create preapproved content for them to post.

"It's extremely efficient once you have a content machine in place," says Glover based on ING's pilot. "The social software enables us to populate preapproved content financial representatives can access. It makes it easy for the advisors to go in and click on what they want to post, and they can add a personal greeting."

It's felt preapproved posts help advisors participate in the conversations of the network. "This is part of a bigger effort to meet consumers where consumers want to be," she adds. "We want to be where the future is and our advisors have said they want to be participating in this great new avenue that's been opened up to them. It can help deepen business relationship and grow new relationships so we're very excited to be opening up that door for our financial service advisors."

Across the Industry

Socialware has worked with a number of financial clients including Morgan Stanley's 8,000 advisors' social profiles. Edward Jones had a large 3,500 advisor deployment now nearing 5,000, and Guardian Insurance now has over 3,000 users on LinkedIn.

ING's rollout is representative of most financial service firms, says Milne. He expects that given the positive responses from the pilot, and Glover's statement that they will not artificially delay anyone that wants to join, ING will be well over the initial goal of 100 advisors on LinkedIn by the end of the year.

Milne says the next step for the industry will be applying different sets of rules for different users, such as insurance brokers, wealth managers, bankers, and more. "All have uses for LinkedIn and other social channels but they are different uses and so are the rules that apply to them."

ABOUT THE AUTHOR
Before joining UBM Becca served as Editor-In-Chief at Kapitall Wire, the sister site to an online brokerage firm that combines the challenges of the stock market with the thrill of ...