Keeping Firms’ Social Media and Marketing Compliant

While financial advisers weigh their options for social media strategies, firms are increasingly seeing a need for advanced technologies and innovative tools to help with digital marketing. 

During two separate discussions during the Social Media and Digital Marketing Seminar, organized by the Securities Industry and Financial Markets Association in New York in October, speakers had differing stances on the right approach to social media and marketing usage for firms.  

Staying Updated on Compliance 

Officials from the Financial Industry Regulatory Authority and other compliance experts noted that—while establishing a marketing strategy is important—firms’ efforts must remain compliant as communications technologies evolve. 

Among advisers surveyed by Broadridge in its Financial Advisor Marketing Trends Report, out of about 400 advisers surveyed, 58% were focused on acquiring new clients. Despite this goal, three in 10 advisers were dedicating less than one hour a week on their marketing efforts, such as building personalized profiles for firm professionals or working with third-party content to market firm initiatives, according to speakers.  

During a discussion moderated by Tara Gilchrist, senior vice president at LPL Financial Holdings Inc., Ira Gluck, vice president and head of FINRA’s Advertising Regulation Department, discussed FINRA’s proposed modernization of its communications rules, published in July. 

Gluck emphasized that the proposal, outlined in Regulatory Notice 26-14, remains under consideration and is intended to give firms more flexibility in how they supervise retail communications. 

One of the proposal’s most significant changes would allow firms to adopt a more risk-based supervisory framework, enabling them to determine which communications require pre-use approval based on the risks presented. 

“I think it’s important to recognize that this is really designed to allow firms to make a risk determination,” Gluck said. “That can have tremendous benefits for trying to deal with some of that volume while also ensuring, from an investor-protection standpoint, that the riskiest things are receiving the most attention.” 

The proposal would also eliminate FINRA’s long-standing distinction between “interactive” and “static” social media content, which Gluck said has become increasingly difficult to apply.  

Under current rules, interactive communications—such as real-time social media conversations and comment exchanges—are generally treated differently from static content, such as advertisements, profile pages or pre-written marketing posts. 

“The line is blurred,” he said. “It’s become increasingly more difficult to determine what’s interactive and what’s static.” 

In the proposal, social media communications would be folded into the same risk-based framework used for other retail communications. Rather than requiring firms to categorize posts as either interactive or static, firms would have greater flexibility to determine which communications require pre-use review based on such factors as the complexity of the product being discussed, the presence of performance information, the intended audience and the overall level of investor risk. 

Gluck said FINRA is also attempting to maintain a technology-neutral regulatory approach as firms adopt artificial intelligence tools. While firms may use generative AI to assist with content creation and review, they would remain responsible for the communications those tools produce. 

“Communications are the responsibility of the firm, whether they are written by a person or generated by AI,” Gluck said. 

He added that generative AI tools can be incorporated into supervisory systems, provided they are properly vetted, tested and monitored. 

The proposal would also modify certain filing requirements and update provisions governing recommendations to better align with the SEC’s Marketing Rule. 

According to Gluck, FINRA’s effort stems partly from industry feedback about the growing volume and speed of digital communications. “We’re hearing that firms are spending much of their time on communications that are fairly low-risk,” he said, noting that approximately 90% of communications filed with FINRA receive no comments from regulators. 

Taking Time for Strategy 

During a separate discussion moderated by Ramprasad Sandilya, senior vice president and chief growth officer of wealth management at Broadridge Financial Solutions Inc., compliance and tech industry professionals also raised the point of dedicating time to create a firmwide marketing strategy.  

Panelists noted that the average adviser only spends two hours a week on marketing efforts, according to Broadridge’s Financial Advisor Marketing Trends Report, which was presented during the discussion. More effort may be required to fully integrate social media, data and artificial intelligence.  

“It’s not really the number of hours you’re spending, it’s the quality of time,” Sandilya said. “Do you have a structured approach? Because you could spend a whole lot of time, which could hurt productivity, or you’re spending too little time.”  

The Broadridge report also found that 85% of responding advisers reported that finding time for marketing strategy was challenging.  

“If they did focus on it—and they used a structured, compliant approach—there were some significant results, Sandilya said, noting that on average, advisers with a structured marketing strategy generated 168% more leads each month and onboarded 50% more clients in a year.  

 “More than 42% of them are able to convert a social media lead into a client, and about 34% of them are more confident that they can meet their growth goals in a year,” he said.

Caroline Bello, senior solutions manager at marketing platform Yext Inc., said many advisers prioritize highly visible marketing activities, such as social media posts and personalized content. However, they often overlook the technical infrastructure that supports those efforts, including search engine optimization, online business listings and website discoverability. 

Dedicating only two hours a week to a firm’s marketing efforts, she said, allows important long-term initiatives that can drive client engagement and lead generation to fall through the cracks.