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The state of social media in financial services presentation
1. The State of Social Media in Financial Services
Jared Licklider, Senior Analyst
DALBAR, Inc.
2. Overview
ĂRegulations and policies regarding social
media
ĂAnalysis of social media use for financial
service firms
ĂExamples of social media use on
financial service websites
ĂConsiderations for using social media
now and in the future
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October 2011
4. Why Social Media?
Ă Social media sites and blogs account for 23% of Americansâ time spent
online
Ă Women 18-34 years old are most active users or social networks and
blogs
Ă Americans 35-49 comprise 27% of the social media audience and are
4% more likely to visit a social network or blog than the average Web
user
Ă Facebook had 140 million visitors during May 2011 and reached 70%
of active U.S. Internet users
Ă 53% of active social networking users follow a brand!
Ă 70% of active adult social networking users shop online, 12% more
than the average adult Internet user!
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Nielsen â The Social Media Report Q3 2011
October 2011
6. NASD Rule 2210
Ă An email or instant message sent to 25 or more prospective retail
customers is sales literature.
Ă An email or instant message sent to a single prospective or current
customer, or an email or instant message sent to an unlimited number
of current clients and/or less than 25 prospective retail customers
across an entire firm within a 30-day period, is considered
correspondence.
Ă Password-protected sites are sales literature.
Ă Real-time interactive electronic forums and chat rooms, non-static,
interactive components of social networking and blog comments are
considered public appearances.
Ă Publicly available websites, banner advertisements and bulletin boards
are advertisements. The non-interactive components of social media
websites, such as the firm background, history, profile, or wall
information, are also considered advertisements.
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October 2011
9. FINRA Regulatory Notice 10-06
Ă Suitability regulations discussed in NASD Rule 2310 apply to
recommendations supplied through social media.
Ă No rule exists to limit which members of a firm are able to create a
social media account, however, training is required for those members
who wish to use social media for business purposes. Additionally, firms
should place restrictions on any member with a history of compliance
problems who wishes to use social media for business purposes.
Ă Third party posts to a social media website are not treated as a firmâs
communication with the public. However, issues arise when a firm
endorses a third party post, is involved in the preparation of a third
party post, or allows offensive or copyrighted content to be posted to
their social media site/page.
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October 2011
10. FINRA Regulatory Notice 11-39
Ă Autobiographical information, such as place of employment and job
responsibilities, in certain contexts, could be a business communication.
Ă Interactive content can become static if it is used that way and would
fall under new rules.
Ă Since static content on social media sites is considered an
advertisement, then changes to that material must receive prior
approval.
Ă No using social media sites or devices that automatically erases or
deletes a communication.
Ă Recordkeeping responsibilities are not dependent on the device used to
make the communication or whether the device was issued by the firm
or is for personal use.
Ă Firms can allow the use of personal devices for business
communications but must be able to retain, retrieve and supervise
business communications no matter if the firm owns the device or not.
Ă Records of third party posts need to be kept.
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October 2011
11. Internal Firm Policies
Ă Approving use of certain social media sites but not all.
Ă Employees are allowed to list their company and occupation on
personal pages.
Ă Employees are not allowed to post about their company on personal
pages.
Ă Only certain individuals within a firm are allowed to post to company
social media websites.
Ă Certain individuals, like financial representatives, are only allowed to
post pre-approved content.
Ă Compliance department will routinely audit firm and employee social
media pages.
Ă Requiring training for social media use.
Ă Some firms use webinars or training sessions. Some firms also test
social media users and require a passing score.
Ă Installation of recording/tracking software onto employee computers
that will be used for posting to and managing social media pages.
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October 2011
12. Compliance
Ă Incorporate Compliance early in the process
Ă Familiarize Compliance with the sites and explain how
you plan to use it
Ă Train advisors, employees, and representatives
Ă Monitor sites and posts
Ă Archive social media interactions
Ă Involve Compliance but do not overburden them with
posts that may not need review
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October 2011
13. Usage Guidelines
Ă Do not post personal or account information or request transactions.
Ă The firm is not responsible for the privacy and security of the social
media site or any third party sites linked to within posts or on the page.
Ă The firm is not responsible for content for other social media pages or
third party sites linked to within posts or on the page.
Ă The firm does not endorse posts or third party links or websites (or
advertisements usually found on the right hand side of the page on
Facebook).
Ă Do not post obscene, explicit, and/or offensive comments.
Ă Do not post recommendations for specific investing products.
Ă The firm will not respond to comments (this is not applicable to every
company and some are responding to basic customer service requests
and general posts from their followers/fans).
Ă The firm reserves the right to block users and delete posts they deem
inappropriate.
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October 2011
14. Social Media Background
Ă The Big 4:
ĂŒ Facebook
ĂŒ Twitter
ĂŒ LinkedIn
ĂŒ YouTube
ĂŒ Others: Tumblr, Blogger, MySpace, Wordpress,
social bookmarking sites
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October 2011
15. Social Media Background
Ă The Big 4:
ĂŒ Facebook - personal site, less-frequent posts,
profile pages for different promotions
ĂŒ Twitter â more frequent posts, pushing content,
driving traffic back to public website
ĂŒ LinkedIn â connecting professionals, finding
employees
ĂŒ YouTube â video content
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October 2011
18. Social Media â How is it Used?
Ă Fielding very basic customer service and
complaints
Ă Sharing educational, company, human
interest and market related articles
Ă Support company promotions, sponsorships
and events
Ă Connecting with financial professionals
Ă Blogs
Ă Prospecting for new talent
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October 2011
20. Customer Service
Ă Complaints
Ă Website technical issues
Ă Widespread online/offline problems
Ă Policy/account/contract specific transactions
or problems
Ă Key detractors: authentication, written
authorization for certain transactions,
complex transactions, and possibility of
personal information becoming public
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October 2011
29. Customer Service
Ă Policy/account/contract specific transactions
or problems
Ă Key detractors: authentication, written
authorization for certain transactions,
complex transactions, and possibility of
personal information becoming public
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October 2011