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Survey: Financial pros not following FINRA guidance for social media

Marcia Savage

A survey of financial advisors found that many are using Twitter, LinkedIn and Facebook for business but not complying with regulatory guidance on social media use.

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Earlier this year, the Financial Industry Regulatory Authority (FINRA), which oversees U.S. securities firms, released Regulatory Notice 10-06. The notice provides guidance on how FINRA rules governing public communications apply to use of social media sites by financial firms and their employees for business purposes. The guidance cites the need for firms to have social networking policies and to retain business-related communications made on social media sites.

However, the survey -- released Monday by Austin-based Socialware Inc., a provider of social media control services -- indicates that the guidance isn't always being followed. More than 60% of the 196 North American financial advisors polled use social media for business purposes but 32% of those surveyed said their company doesn't have a social networking policy. Fifty-seven percent said they were aware of their company's social media policy while 39% reported using social networking against corporate policy.

Sixty-six percent of those surveyed who use social media for business purposes said there was no archiving process in place and 22% manually archive communications.

"This research shows that oftentimes financial services companies are in violation of FINRA's guidelines on social media without knowing it, opening up their firms to a great deal of risk," Socialware CEO Chad Bockius said in a prepared statement.

Fifty percent of respondents cited an inability to archive data, time constraints and compliance issues as top barriers to adopting social media for business use. But financial advisors that use social networking are reaping benefits, according to the survey: Almost 50% have been able to either acquire referrals or new clients because of their social networking use.

Of the financial advisors surveyed, about 53% have more than 100 clients while about 80% have at least 25 clients.


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