With more than 800 million active users across Facebook, LinkedIn, and Twitter, social media cannot be ignored. Financial institutions must adapt or face mass customer migration.
In researching and writing my social media books, The Facebook Era: Tapping Online Social Networks to Market, Sell, and Innovate and How to Make Money Marketing on Facebook, and in my subsequent work with thousands of financial professionals, I have seen the many ways financial institutions are making new technologies work for them, ultimately succeeding in the LinkedIn and Facebook era. These five guidelines could help you develop your best practices.
1. Address regulatory compliance. As you probably already know, there are a number of federal regulations governing online communications. SEC Rule 17a-4 and NASD Rules 2210, 2211, and 3110 require records retention for a minimum of three years on all incoming and outgoing business-related electronic communications, including all social network messages, status updates and posts.
FINRA enforces these SEC regulations as they apply to broker-dealers, and last year issued Regulatory Notice 10-06 to underscore the importance of extending good governance practices to include social media. While the specifics of Dodd-Frank are still being determined, new laws governing other mainstream financial professionals are likely on the way.
The most successful financial institutions and their representatives possess the forethought to implement sound records retention and review procedures as they integrate social media initiatives. They exercise cautious but not exclusionary best practices from the onset.
Instead of looking the other way or ignoring the fact that social media is part of their representatives' lives, financial institutions need to put systems in place to enable the proper monitoring, workflow and review process for social media communications as well as for capturing and archiving all social media messages in a compliant, searchable format.
2. Develop a company social media policy. Strong financial institutions create and communicate firm-wide policies regarding social media, including which sites are allowed and under what circumstances or business use cases. Other areas include data privacy and security, intellectual property/confidentiality, data ownership, employee productivity, brand misrepresentation, and what happens when employees move on to new roles, departments, or firms.
In addition to communicating areas of unacceptable use, the most effective social media policies also focus on the positive. When you develop or amend your policy, try to communicate the firm's goals for using social media, as well as provide helpful reminders, suggestions, and examples.
3. Invest in employee training and education. Social media training and the scope of what employees are and aren't allowed to discuss is a critical element of any plan. Examiners look for plans that are "reasonably designed" to ensure that employees are supervised and trained on communications policies. Proper training and education protects everyone from potential violation of fiduciary duties to investors. The best training programs highlight compliance risks and the upside of social media-related activities.
4. Learn about your customers while engaging them. Great financial organizations and representatives recognize that the value of social media comes from ongoing customer engagement rather than one-time creation of a social network profile or a one-off campaign.
Social media can help establish credibility and expertise for your brand. Facebook pages, LinkedIn groups, and status updates are powerful new channels through which to share blog posts, new reports from your research team, and unique points of view. Financial professionals can win followers and build trust over time by providing quality answers to posted questions or initiating interesting dialogues of their own.
Social media can also be used to learn about customers. Reps can leverage real-time updates from social networking sites to continually prioritize their prospecting and relationship-building activities. Employer or job title changes, joining a board, moving to a new city, growing a family, or being involved in a merger or IPO can signal time for an up-sell or a new set of services.
5. Reconsider standard security questions for authentication. With the prevalence of personal data being shared on social networking sites, it is all too easy for accounts to be compromised. The answers to popular security questions like, "What is your mother's maiden name?" and "What was the name of your high school mascot?" are increasingly available on people's Facebook profiles.
Regardless of whether your firm proactively embraces social media, it's important to recognize the security risk associated with customers using and sharing information on social media sites frequented by hackers.
The successful financial firms of today and the future are those who can move quickly to address compliance risks by implementing the proper systems, policies, and training while equipping their people to successfully engage audiences and acquire, retain and delight customers through social media.
