This POV is here to provide guidance on how financial and investment management institutions can use social media to drive business relationships in compliance with strict government regulations.

1. Financial
Institutions and
Social Media
Melanie Taylor
Vice President
October 2012

2. 2 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Table of Contents
The Purpose of this POV 3
What are the FINRA regulations and what do they mean? 4
Third-Party Moderation Partners 6
How are financial institutions currently using social media? 8
Recommendations for activating social networks for financial institutions 12
Resources 13
About Social@Ogilvy 14

3. 3 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
The Purpose of this POV
T
his POV is here to provide guidance rules and regulations from state regulators,
on how financial and investment the SEC and FINRA. These rules require all
management institutions can use activity related to the business to be recorded
social media to drive business relationships and archived, and requires the firm to create
in compliance with strict government defined policies and procedures.
regulations.
There are several software companies that
Summary have developed archival and compliance
solutions for financial institutions. We evaluate
Like other industries, financial firms have some leading providers here, as well as some
been eager to leverage the popularity of social guidance on choosing a provider. Many banks
media to service their business. However, to and investment management firms have
ensure that investors are protected from false already created a social media presence with
or misleading claims and representations, and different objectives and employee roll-out
firms are able to effectively and appropriately plans. We can learn from their experience
supervise their associated persons’ and help firms create the best plan for their
participation in social media sites, the financial organization.
industry is subject to strict communications

4. 4 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
What are the FINRA regulations
and what do they mean?
B
ased on FINRA guidelines from 2010 and 2011, recent rulings by the SEC and
a state regulator’s deficiency letter obtained by Thomson Reuters in May
2012, we have compiled the following summary of what the rules mean for
a financial services firm that wants to participate in social media. Although these
mostly apply to investment firms and brokerages, retail banks that sell securities
also must comply with these rules.
1 Record-keeping. Every firm 2 Suitability (recommendations
that intends to communicate, or to customers) responsibilities.
permit its associated persons NASD Rule 2310 states that the
to communicate, through social person receiving an investment
media sites must first ensure recommendation must be
that it can retain records suitable for it. That means that
of those communications. an untargeted social media post
Firms cannot delete, and or communication that goes
must archive, all social media to a large group (like LinkedIn
activities. There is software connections), must be suitable
available to help with that, for all of them. An important
discussed within. factor in this regard is whether
a particular communication
from a broker-dealer to a
customer reasonably would
be viewed as a “call to action.”
For example, some states have
ruled that “Liking” a brand on
Facebook can be seen as a
recommendation.

5. 5 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
3 Pre-approval of Content. 4 Supervision of social 5 Third-party posts. Social
All static content (such as media sites. Firms are media posts from third
Facebook and LinkedIn required to supervise parties are not considered
profiles) requires interactive communication communications from a
documented pre-approval on social media sites firm unless the firm has
before posting. A static and adopt policies to endorsed or is involved
posting is deemed an stay in compliance with in the preparation of the
“advertisement” under FINRA guidelines. For content. This means that
NASD Rule 2210 and example, firms may adopt firms are not responsible
therefore requires a procedures that require for what others say or
registered principal to principal review of some claim about their products
approve the posting prior or all interactive electronic and services, unless they
to use. Interactive content communications prior to actively involve themselves
(the stream of updates use, or may adopt various with the third-party
to Twitter, LinkedIn, methods of post-use content. Under certain
Facebook wall content and review, including sampling circumstances, however,
other networks) doesn’t and lexicon-based search third-party posts may
need vetting, but must be methodologies. become attributable to the
supervised — sampled firm. Whether third-party
regularly after posting, content is attributable to a
for compliance violations. firm depends on whether
These rules apply to all the firm has (1) involved
content of a business itself in the preparation of
nature, whether from an the content or (2) explicitly
official company account or implicitly endorsed or
or an employee’s own approved the content.
personal account.

6. 6 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Third-Party Moderation Partners
I
n order to maintain compliance with all 1 What types of archiving and compliance
of these rules and regulations (archives, software is your organization already using
moderation, approved posts), savvy financial for online communications?
services firms are partnering with one of
several Web-based software providers to 2 How many employees need access to the
help automate these required processes. software?
Some vendors support the archiving process,
others focus on compliance, and a few do both 3 What platforms do you need to archive?
(most of these platforms work through proxy
redirect, so will only work when employees 4 Do you also need content library
access these sites from the office – though capabilities?
some are expanding to include coverage from
mobile devices, as well.) Choosing a provider Following is a summary of some top providers.
should be based on several things:
Compliance and Archiving Compliance and Archiving
Works exclusively with financial Archiving Only
companies, which ensures tight
compliance with all new rulings. They
also archive all social media activity
and provide a pre- and post-approval Offers a full service solution for financial
support system. There is an additional firms that need archiving, monitoring,
social media relationship offering that maintaining and surveillance of the
tracks engagement metrics. activities on social media. Arkovi’s
compliance tools also enable the
capture, policy enforcement and pre-
review of LI, TW, and FB with automatic
export to our email archiving partners,
for archiving, supervision, eDiscovery
and audits.

7. 7 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Compliance only Compliance and Archiving Compliance and Archiving
A compliance and analytics Captures and maintains posts Archiving Only
service provider. The analytics for the five key platforms.
module allows a user to do Clients can also opt for
a deep dive into all social content libraries, and get
platforms, to determine support from any device or Smarsh provides compliance
overall reach and strength of interface. They can capture and archiving tools similar
individual posts. Can set up advisor updates for post- to other platforms. The
pre-approved content, and approval. Hearsay can either difference for them is
there is a lexicon library for retain the data it captures security. They own and
original posts. Rather than or push it out to a client’s maintain all their own servers
archive data, they push the system. Uniquely allows that archive a company’s
records to a firm’s content clients to choose features a la data. They also support posts
management platform. Plus, carte. for Salesforce Chatter, Jive
they have an Android mobile and Yammer, in addition to
application. Facebook, Linkedin, and
Twitter.

8. 8 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
How are financial institutions
currently using social media?
M
any financial services firms have moderated and archived by financial firms,
tested social media activations within and posts must be pre-approved, often in the
the FINRA guidelines, with some form of a content library for employees to
success. There have been two approaches choose from, some firms are able to attribute
that firms have embraced: (1) brand-led and some business success from social media
(2) employee-led. And many firms are testing engagement.
the waters of both. Because brokers/advisors
are the sales generators and often the face Morgan Stanley Smith Barney has been slowly
of a firm, activating their networks can be rolling out access to Twitter and LinkedIn,
more beneficial than a corporate-voiced using the Socialware platform to provide pre-
social platform. However, having multiple approved posts. Many pre-approved posts
touch points opens up exposure to risk and include links to original content found on the
compliance issues, and therefore, may not corporate website, or public content from
be the best way of beginning a social media other financial news provider sites. All brokers
program for a firm. Although all profiles on use the letters MSSB in their Twitter handle,
Facebook, LinkedIn and Twitter are required branded wallpaper
to be and link to their profile
pages on the Morgan
Stanley website.
They use previously
approved language on
their LinkedIn pages
after a personal
summary.

9. 9 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Have you gained new clients
through engagement on LinkedIn?
Corresponding gain in assets under
management from new clients
Less than $500K
42%
NO
38% $500 to $999
YES
62% 20%
$1M to $4.9M
20%
More than $5M
32%
12%
Source: LinkedIn, 2012
The consensus so far in Morgan Stanley is that Like Morgan Stanley, Goldman Sachs has
Twitter is helping brokers stay connected to steered clear of Facebook activity on behalf of
their clients with newsworthy and informative the brand. This is likely due to the challenge
updates, but they are having more business of managing negative comments posted to the
luck with LinkedIn ,where one agent reported wall. Goldman Sachs has instead branched out
bringing in over $10MM worth of business, to use YouTube to reach their target audience
due to connections leading to conversations. on a social platform. However, they do not
This is supported with research done by allow comments on their videos, therefore
LinkedIn, showing more than 60% of financial eliminating the social engagement. The videos
consultants were using the platform to find do remain shareable. Goldman Sachs also
new prospects. uses Twitter (they launched in May 2012) and
a company page on LinkedIn. Their social
media goals are more about building thought
leadership and brand visibility (based on their
Social Media Manager job posting).

10. 10 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
One investment brokerage that maintains an Several banks, like Deutsche Bank and Wells
active presence on Facebook is Vanguard, Fargo, also engage with social media. Wells
which was the first brand to lead the way Fargo has allowed some mortgage bankers
in social media in 2010, just as the SEC and to have Facebook pages to communicate with
FINRA released their guidelines. However, homeowners. Other banks, like Deutshe Bank,
their Facebook page does have some negative have identified leaders to be the voice of the
comments on the small section of the brand in social media. All of these selected
Timeline designated for external wall posts. people are using pre-approved posts, and
A Vanguard representative usually responds following strict social media policies per the
with a comment to help solve the problems FINRA guidelines.
regarding issues with funds or process, but
specific investment complaints are left without
a response.

11. 11 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Social@Ogilvy has worked with Citizen’s Another option to engage socially without
Bank to create those pre-approved posts using social platforms like Twitter or LinkedIn
that the compliance team approves. We used is to create an Influencer Network to help
a risk response matrix to identify strategic extend the reach of a message online, or to
opportunities for the brand to join the provide feedback to the financial institution.
conversation, and defined the best ways to do Social@Ogilvy helped TDAmeritrade do just
that. that when they were launching their Investools
products. Using our Influencer Relationship
Management process, we created a network of
online influencers that actively blogged about
the financial industry, to help TDAmeritrade
create their online tools offering.

12. 12 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Recommendations for activating
social networks for financial
institutions
W
e believe that there is a huge 3 Develop a social media strategy with
opportunity for financial services defined and measurable goals to
to use social media to help grow demonstrate the impact on the business;
their businesses through a strategic use of it’s not just about launching a Twitter page.
engagement tactics, while remaining within
all government regulations. The following are 4 Create a pre-approved content library to
key steps to creating a social presence for your activate in social channels (if applicable).
brand: Then, develop a process to keep it relevant
with timely updates.
1 Develop detailed enterprise-wide social
media policies and guidelines. Then, 5 Support the program with a detailed
develop a training program to ensure that moderation plan to ensure compliance for
all employees are aware of the policies in all employees across all platforms.
place and the reasons why.
Want to get started immediately? Contact your
2 Choose an archiving partner to meet Ogilvy partner representative for additional
FINRA and SEC retention guidelines for details, project management schedules and
eDiscovery. Social@Ogilvy can help you executing a scope of work.
choose the best one for your social media
plans and your organization size.

13. 13 HOW FINANCIAL INSTITUTIONS CAN USE SOCIAL MEDIA
OCTOBER 2012
Resources
www.socialturns.com Dealbook/New York Times Online, On Wall St.,
Keeping a Tight Rein on Twitter, W. Alden, Mar
Harvard Business Review: Online, Social Media 21, 2012
Compliance Isn’t Fun, But It’s Necessary http://dealbook.nytimes.com/2012/03/21/on-
R. Holmes, Aug 23, 2012 http://blogs.hbr.org/ wall-st-keeping-a-tight-rein-on-twitter/
cs/2012/08/social_media_compliance_isnt.
html FTI Consulting, http://www.fticonsulting.
com/global2/media/collateral/united-states/
BankTech.com, Creating a FINRA-Friendly financial-advisors-use-of-social-media-
Social Media Plan, S. Opplinger, Mar moves-from-early-adoption-to-mainstream.
27, 2012 http://www.banktech.com/ pdf
channels/creating-a-finra-friendly-social-
media-p/232700252 Fourth Source: Why the financial sector has
turned its back on social media marketing, A.
http://finra.org Cooper, Aug 2, 2012
http://www.finra.org/Industry/Regulation/ http://www.fourthsource.com/social-media/
Notices/2010/P120760 why-financial-sector-turned-back-social-
http://www.finra.org/web/groups/ media-marketing-10018
industry/@ip/@reg/@notice/documents/
notices/p120779.pdf WealthManagement.com, Got the Social
http://www.finra.org/web/groups/ Media Spins? Help Is On The Way, L. Barack,
industry/@ip/@reg/@notice/documents/ Feb 2, 2012 http://wealthmanagement.com/
notices/p124186.pdf resources-amp-community/got-social-
media-spins-help-way
Thomson Reuters Online: State regulator’s
deficiency letter offers clues for social- http://www.securitiesarbitrationlawblog.
media policies, J. Wallace, May 29, 2012 com/?p=60
http://newsandinsight.thomsonreuters.
com/Securities/Insight/2012/05_-_May/
State_regulator_s_deficiency_letter_offers_
clues_for_social-media_policies/

14. About Social@Ogilvy
S
ocial@Ogilvy is the largest social media marketing communications
network in the world. Named 2011 Global Digital/Social
Consultancy of the Year by The Holmes Report, the practice
leverages social media expertise across all Ogilvy Mather disciplines,
offering an extensive list of services within the foundational business
solutions – Listening and Analytics; Social Business Solutions; Social
Media Marketing and Communications; Social Shopping; Social CRM;
Social Care; and Conversation Impact.
For more information, visit social.ogilvy.com and connect with
us at www.facebook.com/socialogilvy, www.twitter.com/
socialogilvy, www.slideshare.com/socialogilvy.
Contact: melanie.taylor@ogilvy.com and john.bell@ogilvy.com