JConnelly Insights
Don’t Wade into the Deep End of the Social Media Pool Without a PR Buddy
It’s no secret that financial services firms are turning to social media to attract additional clients. Public relations agencies can help financial advisors and fund managers reach their target audiences through social media, and effectively navigate evolving SEC and FINRA regulations.
18TH CENTURY WEALTH MANAGERS TAP INTO 21st CENTURY SOCIAL MEDIA
Across the pond, the Financial Times recently reported that British wealth managers Rathbone Brothers and Charles Stanley, which were founded in the 18th century, have joined the 21st century by increasing their presence on social media — including Twitter, Facebook and investment chat rooms — in order to appeal to younger, tech-savvy investors.
A spokesman for Rathbone Brothers told the Financial Times, “Two years ago we did almost nothing with social media,” but added, “A lot of what we do has to go through our compliance department so there are certainly limitations.”
This is a commonly held view, but differences between U.S. and U.K. laws aside, it is inaccurate. While there are indeed limitations on what financial services firms can post in the social media universe, those restrictions are not suffocating. They are meant to protect investors as well as advisors and managers. A solid understanding of the rules — what they permit as well as what they prohibit — is the key to turning social media into a bridge to existing and new audiences. This is where PR enters the picture.
PR LEADS STRATEGY FOR FINANCIAL FIRMS’ SOCIAL MEDIA
PR agencies can work with financial advisors and fund managers to craft strategies that lead to awareness and brand-building through social media. They can also offer guidance and social media training based on their familiarity with the ever-changing rules governing financial services firms’ social media posts.
Earlier this month, the SEC issued guidelines stating that publicly traded companies can use social media to make corporate announcements, as long as investors are informed which outlets are used to disseminate information.
Last month, the SEC updated its guidelines on social media posts by investment companies. In order to lighten the workload of FINRA, the financial services regulator tasked with reviewing social media posts, the SEC issued a report clarifying what types of social media content need to be sent to FINRA for compliance approval. The report only recommended posts discussing a certain fund’s investment merits or specific information about a fund’s returns for submission to FINRA. Content such as “When reviewing a mutual fund’s historical performance it’s important to consider the following” and “Click on this link [website URL] where we provide full details of our yearly performance since inception” do not need regulatory approval prior to posting.
PR FIRMS KNOW HOW TO SWIM IN SOCIAL MEDIA WATERS
Some public relations agencies employ social media experts who are familiar with these social media guidelines, and can use that knowledge to oversee and build their clients’ social media presence.
Like all businesses, wealth and fund managers must move with the times if they are to survive. However, they must not fall into the trap of becoming overly cautious with their social media activity. Social media guidelines are not complicated to navigate, and with a social media plan adopted in cooperation with a PR agency, financial services firms can make themselves relevant to the next generation of investors.