Social Media Usage for Financial Advisors: Friend or Foe?

Written by: RIA in a Box

While it is hard to believe, it has been over a decade since Facebook entered into our lives, since then various other platforms such as

Twitter , LinkedIn , Instagram and Pinterest have subsequently followed. During social media’s original unveil, investment advisers were hesitant to incorporate these new innovations into their daily business practices given the lack of clear regulatory guidance. While social media usage is still an evolving regulatory area, more registered investment adviser (RIA) firms than ever are now utilizing social media in a compliant manner.

Download the Top 10 Social Media Compliance Guidelines for RIA Firms

Social Media: Opportunities

The use of social media is no longer the future, but now clearly the present: Today, the use of social media is not only often expected – it is required in many ways to reach all different types of prospects. Marketing, in general, is evolving. RIA firms want to not only reach prospects and clients, but to engage with them in an interactive and personable manner.

Social media is cost efficient: As it stands today, there is no cost to create a social media profile and post messages publicly. However, there is an investment in time and firms need to remember to budget for proper social media archiving as posts on social media need to be treated just like any other form of advertising .

Social media is an efficient way to learn: Social media shouldn't just be viewed as a tool to reach clients and prospects, but also a highly efficient way to stay informed on the latest industry trends and relevant news. Such trends and news can lead to new ideas for content to create and share with relevant prospects. It's also very easy to start following other successful RIA firms utilizing social media from across the country to gain great insights and tips

Social Media: Potential Mistakes

When not monitored or executed in a thoughtful manner, a firm’s social media efforts can quickly turn sour and lead to regulatory issues. Falling out of compliance will not only put a firm at risk, but can discredit the firm's public reputation. A few tips to keep in mind include:

Establish a social media policy: Be sure to establish clear ground rules and properly educate the firm's entire staff on the proper and improper uses of social media. The policy should also make it clear which platforms are allowed for professional use and which are not.

Archive all posts: While reviewing all social media posts just like any other form of investment adviser advertising is a good starting point, it's also required that all posts be properly archived and available for review during a regulatory audit.

Never mislead or embellish: Use caution and be sure what the social media posting is saying is 100% accurate and factual.

From a more practical business standpoint, we often recommend that RIA firms do not attempt to establish a presence on every social media platform. Instead, firms should focus on perhaps two platforms that are most relevant to their types of clients. It's important to remember that each social media platform serves its own unique purpose and may also appeal to different types of audiences. Furthermore, simply creating a social media account and beginning to post is unlikely to yield immediate or even long term success. Social media needs to be part of a firm's broader marketing strategy and serves as a channel to distribute the firm's content.

Social media can be a very valuable tool for RIA firms to engage with both clients and prospects. However, as RIA compliance consultants , we want to remind the Chief Compliance Officer (CCO) of all firms that its usage can lead to regulatory issues if the firm does not establish the proper policies and procedures to ensure compliance.