Financial services firms and social media: inconceivable!


The first few years of social media saw no love from financial services firms.  Marketing teams squirmed uneasily in their seats when presented with uncontrolled, open dialogue on the Internet; words like “blog” and “twitter” brought derisive smirks.  These were terms that we raised with clients and prospects at our own peril.

The past year, however, has seen a rush to late adoption by financial providers in all walks of the industry.  There is, we realized together, a happy medium that embraces regulatory guidelines but still allows for use of the channel.

And now…here we go again.  The SEC and FINRA are gathering data to determine how, where, and when social media is being used by financial advisors, setting off alarm bells and perhaps sending us back to the beginning of the learning curve.  This piece in InvestmentNews sums it up, but as it’s subscription only here’s the basic thrust:

Last month, the Securities and Exchange Commission began a sweep of advisers’ use of social media and social networking, according to executives at compliance vendors who have seen an SEC letter requesting information from advisers or have clients who have received it. Meanwhile, Financial Industry Regulatory Authority Inc.’s Social Networking Task Force is meeting next month to discuss whether it needs to update its guidance on how advisers should use social-networking websites.

In an ironic twist, InvestmentNews issued another story two weeks later with the headline Gen Y looks to Twitter, not advisers, for investment info.  That article launches with the line “financial advisers looking to attract younger clients had better sharpen up their tweeting skills.”

Rock, meet hard place.  Hard place, meet rock.

Now the prognostication really gets underway, as we look to predict just how far – and how seriously – the SEC and FINRA are going to take their inquiries.  Fortune Magazine echoes the sentiments of many advisers and marketers when they point out that the real question at hand is not whether or not advisers and institutions should enhance their brand using social media, but whether personal use of social media accounts will fall under regulatory scrutiny.  As Fortune writes,

They may consider employees’ own personal blogs, tweets and other bits and bytes to be fair game, if they detect communications that seem to relate to the industry and to the employees’ activities. In the world of public company reporting, this issue affects both management and the boards of directors. In the world of financial firms, this goes right to the top of the org chart  — where a little can say an awful lot.

Realistically, this could no doubt (and for good reason) set back financial firms’ willingness to go full bore into the social media scene. Anyone still remember The Princess Bride?  I have in my head the unshakable image of the inimitable Inigo Montoya, sodding drunk and angrily grumbling, “You told me to go back to the beginning. So I have. This is where I am, and this is where I will stay. I will not be moved.”

Let’s hope this ends up going down a better path…and for those that now have an unquenchable thirst for Inigo Montoya, click through to YouTube and sleep easy tonight:


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3 Responses to “Financial services firms and social media: inconceivable!”

  1. I will go up to the six fingered man and say… « Says:

    […] before I left work today I got an email from the corporate blog announcing that a new post was online.  I decided to wait until the following day to read it, and didn’t even check the headline. […]

  2. J Desrosiers Says:

    Great post!

  3. Wagging wisdom’s long tail « EZG Blog Says:

    […] landscape of the 21st century.  A few weeks ago Evan wrote an excellent post about how financial services companies should navigate this brave new world of social media, and later expanded upon it as an article in Financial Advisor […]

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