Social Media as a 24/7 Kitchen Table

It is increasingly being used as a business tool, but users can run into compliance issues on social media when they tweet or post an update.

The Securities and Exchange Commission (SEC) early in April issued another report on using Facebook, Twitter and other social media, in part because of the status update made by Reed Hastings, chief executive of Netflix. (See “Tweet Away (Just Be Sure You Alert Investors).”)

“The bottom line is that it feels like the regulators are being very innovative and trying to be proactive, and think through the use of social media,” Joanna Belbey, social media and compliance specialist with Actiance, told PLANADVISER.

There’s no need to approach social media as an entirely new species, though, Belbey said. “It’s just another form of written communication,” she said. “It’s not special—it’s just an outlet, and as such, it is governed in the same way as other forms of communication those firms are familiar with.”

From an adviser’s point of view, the most important question to ask is, are those communications suitable? Communications must be viewed through a lens of fiduciary responsibility, Belbey noted.

The Financial Industry Regulatory Authority (FINRA) takes the position that firms typically do understand what appropriate communication is, Belbey said, but she added that the confusion lies in the specifics of using a new technology. What’s filed and what’s not filed? What are the recordkeeping requirements?


Belbey recommends that communications be thoroughly considered. Content should be evaluated for the need for disclosure. Advisers with fiduciary responsibility should not say anything through social media that would not apply to all the people following them. Investment recommendations, for example, cannot possibly apply to everyone.

If an adviser has 1,000 followers, discussing an equity and making a recommendation would be ill advised. “You need to know your client’s investment objectives and risk tolerance,” she said. Social media is a broad form of communication.

“We advise—and regulators advise—keeping communication more general,” Belbey said. If an adviser wants to discuss performance, followers can be steered back to the website for recent performance information. “It goes back to common sense and being appropriate, and keeping in mind fiduciary responsibility to that customer.”

Social media isn’t the place to pitch or sell. It’s more about sharing expertise or knowledge, according to Belbey. It’s a good channel to share concepts and information that may not be new, but can be shared in a new way.

And it’s where people need to go to bring information and connect with a generation of people who are avid users of social media. “It’s not just Millennials,” Belbey said. “Social media is used more and more by different generations.”

Belbey suggests using social media for research. Twitter is a great way to find out what people are talking about. LinkedIn is a good way to build connections. Belbey mentioned a registered independent adviser in a small town who wanted to work with a large company in that town. “He made himself a valuable resource to that firm by working with individuals,” she explained. Using LinkedIn updates to see recent hires, he reached out and built relationships. As he came to know more people, the logical next step was, what does the plan sponsor need? Eventually, she said, he was able to do some business with the company itself.

Not everyone is that well versed in using these tools. “Once the risks are identified and mitigated, you need education on what’s allowed and what’s not allowed,” Belbey said. “What are the firms’ policies? You need information on best practices. How do you build engagement?” Pinning down these details is what ensures success.

Belbey also noted that status updates and new jobs can represent money in motion—an opportunity for rollovers. But, she cautioned, social media site communication should be kept general and used to lead to a one-on-one meeting. “In insurance, it’s called the 24/7 kitchen table,” Belbey said—simply a way for people to talk one-on-one and build relationships.