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NEXT Financial Group – How can we leverage Social Media under FINRA’s regulations?

I work with several financial institutions, just like Next Financial Group,  who realize the power of social media and want to leverage it to expand their online presence, but may be unsure of EXACTLY what they are allowed to do according to Compliance and FINRA regulations.  Social Media websites like Twitter, Facebook and LinkedIn have popped up on the radar of compliance officers across the country as financial institutions are realizing the importance of using social media to connect with their next generation of clients.  Hands are tied… or are they?

This isn’t just an issue in the financial services industry. Clients in certain industries have their hands tied when it comes to using social media to communicate with their clients. While I recognize the need for regulation, organizations like FINRA who are in charge of setting the boundaries need to understand that the Internet itself is a social medium so the lines are pretty blurry (from my perspective) when it comes to defining what people can and cannot do on “social media websites.” They are tools vital to the communication between companies and their clients… and it’s not going away.

People are recognizing the problem, leading to creation of sites like linkedFA, which is a social media site in beta mode for financial professionals and their investors and may be a good alternative if you are looking for a way to connect but don’t want to risk violating the regulations.

When NEXT Financial Group, Inc. approached us with questions regarding the use of social media, I referred them to FINRA’s Social Media Web Sites Regulatory Notice for detailed information on what FINRA suggests they do and don’t do on blogs and social networking web sites.

Make no mistake, FINRA is monitoring the use of social media and will crack down on what they deem misuse.

So while you can participate, do so carefully – The key is to create your own procedures and social media best practices to prevent violation of FINRA’s regulations and other compliance organizations. This concepts applies to anyone that works in an industry with regulations on the use of social media.

Quick Disclaimer: I am not a Financial Services Provider. I help organizations grow by helping them find, attract and keep their customers.

What they can do: Websites like Linkedin are great for doing research and professional networking.  They can set up Google Alerts to monitor keyword phrases related to their topics, brands or competitors.  They can leverage Youtube by having educational videos. They just cannot solicit, endorse a product or make an offering, and should set the privacy & profile settings to prevent comments.

(Again, I am not using this post to express what FINRA allows or specific instructions for companies like Next Financial Group, but rather want to get YOUR opinions on the unrealistic regulations that prevent businesses from using communication and relationship building websites.)

Companies like Next Financial Group, Inc.,  a Houston based company, and their many Independent Broker Dealers & Financial Consultants can still benefit from using the social media sites for research, listening to the communities and competitive intelligence.  From what I’ve been told, they cannot have any profiles, blogs, or pages that allow for visitor feedback as that feedback may be construed as an endorsement.  However, they certainly should be able to publish educational material just like they approve content they deliver in teleseminars, webinars, hotel presentations, radio interviews and through ezines.

I also was told that any communication used through electronic mediums from financial consultants to anyone needs to be kept for seven years.  Good luck with that one on social media websites…

What are your thoughts on industry regulations on the use of social media? Let me know by leaving your opinion or comment below.

Author Byline: Ford Saeks, Business Growth Specialist, Keynote Speaker, Author and Consultant. Helping you find, attract, and keep your customers.

October 11, 2010 Posted By : Ford Saeks


  1. Charlie Van Derven

    I met with FINRA a couple months ago to demo our social media compliance platform. I would love to demo it for you too.

    50 Below currently provides websites to approximately 35,000 wirehouse and independent advisors.

    Thanks for the article. We have a solution to many of the compliance issues revolving around the use of social media websites. While FINRA will not endorse 50 Below or any other provider, they could not punch holes in our solution.

  2. Claudia

    Thanks for the great article Ford.

    What’s the solution Charlie?


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