The announcement of an SEC sweep on RIAs’ social media usage has generated quite a bit of buzz, bordering on fervor. However, this should not come as a shock. Like you, as industry veterans, we have lived through the past 20 years as regulatory bodies have held similar sweeps exploring new product types, investment techniques, business models and the technology that powers our business.
“We have been asked whether last week’s report has had a chilling effect on interest in social media archiving – and the answer is no,” said Blane Warrene, Arkovi chief executive. “Financial advisors want to be compliant and the report of the SEC sweep underscores the need to put a compliance solution in place to utilize social media. But we do not expect regulations to stop the inevitable march of social media through the financial services industry.”
As the industry shifted from paper to electronic media over those 20 years, the adjustments and guidance have been made to accommodate the evolution of technology around handling email, documents, web sites and multimedia. Each time, early adopters influenced trends followed by mainstream adoption. Through each phase, business ultimately identified the optimal procedures and workflows for their operations and regulators identified and structured guidelines and either adapted or wrote rules to manage risk and audit for enforcement.
Free market innovation has challenged regulatory organizations before. The regulators have needed some time to process their response and their response has been proportionate. We see no reason to expect anything different this time.
Social media is a richer method of communicating, interacting and sharing and is having the same (and more of a) significant impact as email had when it arrived on the scene. At the core, social media is a communication of content that can be defined as advertising, client correspondence and static content. What has changed are the mediums and the community potential for the communications and content we seek to consume and distribute.
Strategy, Policy, Tactics
Since the Arkovi launch in September 2009, we have not only provided a compliant solution for financial services, but also have been providing guidance to our clients on best practices for integrating social media into business operations. In light of what the SEC is requesting in its sweep letters, consider your plan and approach to social media as a way to compliantly leverage this powerful new set of tools.
- Strategy – Determine how you want to communicate, connect and market; and how you will represent and monitor your brand, people and services. This includes who and how your team will collaborate, how you plan to link and/or integrate social media into existing communications and marketing processes and how you will measure and benchmark your activities. Finally you also identify the networks and platforms where you seek to engage.
- Policy – The social media policy should include not only the core compliance links to the regulatory rules around electronic communications and advertising, but also the guidelines and culture you are seeking to foster and/or implement from top to bottom. While a CEO or principal may not actively engage in social media – they need to buy in and endorse your goals, guidelines and rules across the board. The result of this policy, then, includes readable guidance for your staff along with clear compliance boundaries and approved procedures.
- Tactics – How to execute your strategy and manage your policy. This includes the tools (apps, software, service providers), the workflow and team assignments and the content creation.
Through a coordinated process, social media can be utilized in your business while enabling your compliance team to respond to the queries and audit questions around surveillance and record-keeping. We would invite advisors to discuss their options and bring questions to us on using social media compliantly. The Arkovi team brings industry compliance, operations and technology expertise to help you get engaged in social media.