Financial advisors using social media must follow strict SEC and FINRA rules to avoid penalties, maintain trust, and protect their reputation. Here’s a quick summary of what you need to know:
- Key Rules: SEC's Advertising Rule bans misleading claims, incomplete data, and undisclosed testimonials. FINRA requires accurate, balanced content, prohibits exaggerated claims, and mandates archiving for at least 3 years.
- Record-Keeping: SEC requires detailed records of all social media activity for 5 years.
- Account Disclosures: RIAs must list all firm-managed social media accounts in Form ADV filings.
- Social Media Policy: Create clear guidelines for content, approval processes, employee roles, and security protocols.
- Testimonials: Must include disclosures about relationships, compensation, and results not being guaranteed.
- Third-Party Content: Verify accuracy, ensure compliance, and include disclaimers when sharing.
Quick Tips:
- Review Before Posting: Ensure content is accurate, compliant, and includes disclosures.
- Employee Training: Teach staff about content rules, platform use, and security.
- Account Security: Use strong passwords, enable two-factor authentication, and monitor activity.
Staying compliant doesn’t just protect your firm - it builds trust with clients while expanding your reach online.
Key Rules Financial Advisors Need to Know
Financial advisors operate under two main regulatory frameworks when using social media: the SEC Advertising Rule and FINRA guidelines. Knowing these rules is essential to stay compliant while using social platforms to grow your business.
Overview of the SEC Advertising Rule
The SEC's Rule 206(4)-1 governs all advisor communications, including social media posts. It bans misleading statements, incomplete information, unsupported claims about performance, and testimonials without proper disclosures [1]. Testimonials, as defined by the SEC, include client statements endorsing or sharing their experience with an advisor [4].
FINRA Rules for Social Media Use
While the SEC emphasizes content accuracy and proper disclosures, FINRA focuses on ensuring fair presentation and accountability for broker-dealers. FINRA's rules require:
- Posts to be accurate and balanced
- Inclusion of all necessary details in communications
- Adherence to strict guidelines for sharing external content
- Archiving all activity for a minimum of three years [2]
Additionally, FINRA prohibits exaggerated claims, promissory language, and performance predictions. To simplify compliance, many advisors use social media management tools with built-in review and archiving features [2].
Checklist for Social Media Compliance
Keeping Records of Social Media Activity
The SEC requires firms to keep detailed records of all social media communications for five years [2]. This includes posts, comments, messages, images, videos, and shared content. Many advisory firms rely on automated tools to handle this archiving process efficiently.
In addition to record-keeping, being transparent about your firm's online presence is just as important.
Disclosing Social Media Accounts
RIAs are obligated to disclose all firm-managed social media accounts, websites, and any client accounts they oversee in their Form ADV filings. This also applies to updates when new platforms are added [5].
After disclosing these accounts, implementing a clear social media policy helps maintain compliance across your team.
Writing a Social Media Policy
Once records and disclosures are sorted, the next step is drafting a policy to guide social media usage within your firm. As Denim Social notes:
"FINRA dictates that financial advisory firms set up review and approval processes for social media posts" [2]
An effective social media policy should cover the following:
- Content Guidelines: Clearly define acceptable and prohibited content, including rules against performance claims and testimonials.
- Approval Process: Establish a straightforward review system, specifying who approves content and the timelines for doing so.
- Employee Responsibilities: Clarify roles, such as who manages accounts, creates content, and handles responses.
- Security Protocols: Enforce strong security measures like two-factor authentication and regular monitoring to prevent unauthorized access [3].
Tips for Staying Compliant on Social Media
Reviewing Content Before Posting
Before hitting "post", make sure your content checks all the boxes: it's accurate, follows SEC/FINRA regulations, is transparent, and includes any required disclosures. Setting up a clear review process is key. Assign specific roles to your team to avoid delays and keep your campaigns running smoothly without risking compliance issues.
Training Employees on Social Media Use
Training your employees is essential to keeping social media activities in line with regulations. Focus on these areas:
- Content guidelines: What is and isn't allowed.
- Approved platforms: Where employees can post.
- Personal vs. professional use: Drawing clear boundaries.
- Security protocols: Keeping accounts safe.
A well-structured training program not only reduces the risk of mistakes but also helps your team confidently navigate social media while staying compliant.
Protecting Social Media Accounts
Account security plays a huge role in staying compliant. Use strong passwords, enable two-factor authentication, and restrict access to only those who need it. Regularly audit account settings, watch for suspicious activity, and update permissions every quarter.
Using social media management tools can make this process easier. These tools help centralize security and compliance efforts, reducing the chances of accidental posts or account breaches [3].
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Additional Considerations for Financial Advisors
Handling Testimonials and Endorsements
Managing client testimonials is a key part of staying compliant with SEC regulations. While social media helps 86% of advisors bring in new clients, missteps with testimonials can lead to compliance issues. Testimonials need to be accurate, not misleading, and include essential disclosures. These disclosures should cover the nature of the client relationship, any compensation involved, the fact that results are not guaranteed, and that experiences may vary.
It's also important to keep a thorough record of the entire process - from getting client consent to publishing the testimonial. Beyond testimonials, sharing content from third parties demands just as much care to stay within compliance rules.
Sharing Third-Party Links and Content
When sharing external content, advisors must ensure it complies with all relevant regulations. This includes being cautious with performance-related materials.
To stay compliant when posting third-party content:
- Confirm the source is reliable.
- Double-check the content's accuracy.
- Ensure it aligns with SEC and FINRA rules.
- Add disclaimers that clarify your relationship to the shared content.
"Staff has consistently interpreted that term to include a 'statement of a client's experience with, or endorsement of, an investment adviser.'" - SEC Guidance [4]
Before posting, have your firm's compliance team review all third-party materials. This step helps maintain consistent compliance across platforms and safeguards your practice.
Conclusion: Balancing Compliance and Social Media Growth
Social media is now a key tool for financial advisors, but finding the right balance between expanding your reach and staying compliant with regulations is crucial. By establishing a clear social media policy, training employees, and conducting regular content reviews, advisors can confidently engage with their audience while adhering to the rules.
Here are some practical steps to help maintain this balance:
- Create clear workflows for content reviews.
- Update compliance procedures regularly to align with changing regulations.
- Focus on growth strategies that align with compliance standards.
For those looking to expand their practice while staying within compliance boundaries, Financial Advisor Marketing offers a free list of 51 tools designed specifically for this purpose.
Digital engagement is no longer optional for financial advisors. By aligning compliance needs with smart social media strategies, advisors can build a strong foundation for growth while meeting regulatory demands. Those who master this balance can set themselves apart, making it easier to attract and retain clients.
FAQs
What are the social media guidelines for RIA?
Registered Investment Advisors (RIAs) need to follow specific rules when using social media to ensure compliance. Here's a breakdown:
Account Disclosure Requirements
- Include all website URLs and social media accounts in Item 1.I of Part 1A of Form ADV [4][5].
- Only business-related accounts are subject to compliance, unless personal profiles are used for business purposes [3].
Record-Keeping and Review
- Keep a record of all social media activity for at least three years [5].
- Make sure every post is reviewed to meet FINRA's standards for fair and balanced communication [2].
Testimonial Guidelines
RIAs must follow SEC rules when it comes to testimonials. This includes providing accurate disclosures and ensuring all reviews are fairly represented [4]. Manipulating third-party reviews or selectively showcasing opinions is not allowed.
"Staff has consistently interpreted that term to include a 'statement of a client's experience with, or endorsement of, an investment adviser.'" - SEC Guidance [4]
