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SOCIAL MEDIA COMPLIANCE: COMPLIANCE FOR THE FINANCIAL SERVICES INDUSTRY IN 2016
#HScompliance
HOUSEKEEPING
• Th is sess ion w i l l be rough ly 45 minu tes long .
• Th is i s be ing recorded – a rep lay w i l l be ava i lab le a f te r the web inar.
• Dur ing the l i ve web inar, p lease ask your ques t ions us ing the Go-To-Web inar conso le o r jo in the conversa t ion on tw i t te r us ing #HSCOMPLIANCE
• The in fo rmat ion d iscussed today i s the p resen te r ’s own op in ion and shou ld no t be cons t rued as the i r respec t i ve company 's v iews o r as lega l adv ice – p lease consu l t w i th your own f i rm ’s comp l iance o r lega l depar tment w i th app l i cab i l i t y o f the ru les to your f i rm ’s po l i c ies .
#HScompliance
PRESENTERS
#HScompliance
@YasminZarabi @StephenFSelby @VictorGaxiola
TODAY’S AGENDA
• THE STATE OF SOCIAL COMPLIANCE
• TRENDS & IMPLICATIONS IN 2016
• LOOKING FORWARD: SOCIAL & BEYOND
• CLOSING STATEMENTS
#HScompliance
MASSIVE DIGITAL TRANSFORMATIONS
MOBILE
SOCIAL DIGITAL
6 Hours average American spends per day on social,
mobile, digital
#1 Social is top Internet activity, surpassing
87% Millennials always have their smartphones on
them
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FINANCIAL ADVISORS AND SOCIAL MEDIA
81% are using social
media for business
53% gained over $1M in
new assets
79% gained new clients
via social media
71% who gained assets were active on a
daily basis
$4.6M Average Asset Gain
2015 PUTNAM SOCIAL MEDIA SURVEY
Source: 2015 Putnam Social Media Survey https://www.putnam.com/advisor/content/advisorTechTips/2488-2015-putnam-investments-social-advisor-survey
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SOCIAL MEDIA: BALANCING THE RISKS & REWARDS
REWARDS RISKS
Being findable online is table-stakes
Stronger client relationships
Improved client retention
Compliance with industry regulations
Advisors are on social, putting firm
at risk, even if it is outside of policy
Missing business opportunity
#HScompliance
KEY INDUSTRY & REGULATORY CHANGES
FINRA 10-06: Guidance on Blogs and Social Networking Web Sites
FINRA 11-39: Social Media Websites and the Use of Personal Devices for Business Communications
FINRA 12-29: Communications With the Public
SEC Guidance on Testimonial Rule and Social Media
FFIEC Guidance on use of Social Media
SEC approves social media OK with RegFD
FINRA Proposed Amendments to Communications Rule, Regulatory Notice 15-16 SEC Proposed Amendments to Form ADV
SEC Guidance on Testimonial Rule and Social Media
FINRA Broker Check Rule Regulatory Notice 15-50
#HScompliance
• Implement a supervision system “reasonably designed” to achieve compliance.
• Supervise employee communications.
• Principals must pre-approve static content.
• Monitor online/interactive content and messaging
9
4 PILLARS OF SOCIAL MEDIA COMPLIANCE
SUPERVISION
RECORD KEEPING
POLICY & TRAINING
CONTENT
• Capture and retain all postings on social media for 3 years from the date of last post
• First 2 years in accessible place.
• Set and document a policy.
• Train employees on policy.
• Follow up on red flags when employees break policy.
• Only put out content that is fair and balanced.
• Don’t provide financial advice without understanding client’s financial situation.
FINRA Rule 2210, FINRA Rule 3110, FINRA Regulatory Notices 10-06 & 11-39
FINRA Rule 3110, FINRA Rule 2210 (b), SEC 17a-3 & a-4, FINRA Regulatory Notices 10-06 &11-39
FINRA Rule 2210, FINRA Rule 3110, FINRA Regulatory Notices
10-06 & 11-39
FINRA Rule 2210, FINRA Rule 2111, Advisers Act Rule 206(4)-7 ;
FFIEC Guidance
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CONTENT PRACTICES
Can advisors create their own posts?
Yes 77%
No 23%
14%
24%
62%
Post-review
Pre-approval if alert
Requires pre-approval
If they can write original content…
What workflow does it go through?
Natively
Hearsay Social Only
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REVIEWING IMAGES
0% 6%
57%
31%
6%
Cover Photo only
Profile Photo only
Cover & Profile Photos
Other No, Neither
Does your firm monitor/supervise profile photos and cover photos?
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SKILL ENDORSEMENTS ON LINKEDIN
14%
17%
49%
20%
Oher
Only Specific Endorsements
No
Yes
Do you allow users to accept skill endorsements?
14%
49%
37%
Sometimes
No
Yes
Allowed to give others skill endorsements?
#HScompliance
LEXICON PRACTICES
20%
53%
27%
Started w/list from Hearsay
Social
Leveraged existing email
lexicon
Other
Where did you develop your lexicon from?
3%
93%
3%
Yes No Other
Do you share the lexicon with users?
#HScompliance
Hearsay Social Audit Task Force Reports cover three areas:
– The workspace & social media accounts – The post and its attachments – The review & approval history
Audit Experience Includes: • 20 Audits (including FINRA, DOL, state, and
internal audits) Audit Trends:
– Majority of recent audits are focused on reviewing a few individual reps over a particular time-span
SUPPORT OF THE AUDIT PROCESS
100% Success Rate with Customer Audits
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TODAY’S AGENDA
• THE STATE OF SOCIAL COMPLIANCE
• TRENDS & IMPLICATIONS IN 2016
• LOOKING FORWARD: SOCIAL & BEYOND
• CLOSING STATEMENTS
#HScompliance
FINRA RETROSPECTIVE RULE REVIEW
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RETROSPECTIVE RULE REVIEW: ACTION PHASE
Board Report published
Public Communications Committee (PCC) convened
New interpretive questions and answers published
Ø Disclosure considerations
Ø Social Media
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FINRA RETROSPECTIVE REVIEW OF COMMUNICATIONS RULES
Stakeholder Responses
FINRA should clarify firms’ obligations with
respect to links to content on third-party websites and posting third-party content on the
firm’s website
• In the ensuing action phase, FINRA staff will consider proposals or other initiatives resulting from the assessment phase.
• FINRA has already appointed a Public Communications Committee to obtain the input of industry and compliance experts on matters including social media.
FINRA should provide increased flexibility and clarity on the application of its rules to social media and mobile communications
67% 6% Neutral
27% Disagree
FINRA Member Responses
Agree 63% 3% Neutral
34% Disagree
Agree
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DEPARTMENT OF LABOR: REVISING THE DEFINIT ION OF F IDUCIARY
#HScompliance
CURRENT STATE
• Hard to become a fiduciary • “Qualified plans”
– 401(k)s – Contributory 403(b)
• Ongoing relationship required
DEPARTMENT OF LABOR: REVISING THE DEFINIT ION OF F IDUCIARY
#HScompliance
CURRENT STATE
• Hard to become a fiduciary • “Qualified plans”
– 401(k)s – Contributory 403(b)
• Ongoing relationship required
FUTURE STATE
• Expansion into IRA market • Hard to avoid fiduciary status. Do
you…? – Service “qualified” plans or their
participants? – Are you providing advice = Buy,
Sell, Hold or rollover? – Did you create, directly or
indirectly the expectation that you would act as a fiduciary? • Written contract? • Verbal contract? • Unintentional?
• No ongoing relationship required.
TODAY’S AGENDA
• THE STATE OF SOCIAL COMPLIANCE
• TRENDS & IMPLICATIONS IN 2016
• LOOKING FORWARD: SOCIAL & BEYOND
• CLOSING STATEMENTS
#HScompliance
• Client expectations changing
• New regulatory updates
• New ways for users to engage
KEEPING UP WITH CHANGES
#HScompliance
FIRMS PRIMARILY FOCUS ON CORPORATE DIGITAL CHANNELS
NEW Digital Direct Corporate Website Direct Channels Mobile App Self Service
Existing Advisors Social Web Email Text
Clients
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SHIFT TO UNIFIED, OMNICHANNEL CLIENT EXPERIENCE
Corporate Office Corporate Website Direct Channels Mobile App Self Service
Clients
Producers ü Social media ü Agent Website ü Email ü Text messaging
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REQUIRES OMNICHANNEL COMPLIANCE & SUPERVISION
SOCIAL FOR ADVISORS
OTHER CHANNELS
ADVISOR MESSAGES
(SMS)
ADVISOR SITES
ADVISOR EMAIL
UNIVERSAL COMPLIANCE & GOVERNANCE PLATFORM
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CLOSING STATEMENTS
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TODAY’S TAKEAWAYS
Client expectations and technology innovation rapidly changing; advisors are adapting. 1
2
Leverage agile technology to supervise, monitor and recordkeeping in accordance with your policies. 3
Regulatory tsunami requires strong compliance program.
#HScompliance
4TH ANNUAL SILVER BOWL AWARDS
Recognizing excellence, innovation, and achievement for the use of social in financial services. 2016 SilverBowl Award Categories • Best Use of Social for Customer Service • Best Use of Social for Consumer Education • Best Use of Social for Recruiting • Best Use of Social for Social Good • Best Use of Social by an Agent/Advisor • Best Social Advisor Program • Best Integrated Social Campaign • Best Use of Social from a Company Operating Outside the U.S. Email: [email protected] Website: www.LIMRA.com/SilverBowl
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THANK YOU!
#HScompliance
@LIMRA @StephenFSelby
@HearsaySocial @YasminZarabi @VictorGaxiola
