Wall Street and Social Media: Progress, But a Long Way to Go
While many companies, most notably those dealing in consumer products, have made tremendous strides in harnessing the power of social media (read any of my friend and fellow blogger Vicki Flaugher’s postings in the Social Media Zone at http://www.commpro.biz/social-media-zone/ to see how), the financial services industry is taking baby steps.
Of course, the financial industry, given its highly regulated nature, tends to be conservative (some might say “boring”). For example, there are strict rules governing what and how financial advisers and brokers can communicate with their clientele. Broker-dealers are mandated to keep records of their external messages, which typically require approval from their compliance departments.
Of course, social media is way too powerful to ignore – just think of all the ways there are to reach you these days – and the Financial Industry Regulatory Authority, better known as FINRA, has issued guidance on the area on two occasions (see http://www.finra.org/Industry/Regulation/Notices/2010/P120760 and http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p124186.pdf).
The industry is closely watching Morgan Stanley’s recent forays into the world of social media. Morgan Stanley Smith Barney will allow its nearly 18,000 financial advisers to use Twitter and LinkedIn in limited ways following a test period. And, while many people tweet about where they’re having lunch, among other inane things, Morgan Stanley’s army of advisers will be using messages approved by the firm. Of course, some (I’m guessing my friend Vicki will be among them) might believe that this runs counter to the very nature of the medium in that it tends to be one that encourages rapid and often spontaneous communications – a dialogue, rather than a monologue. Further, if everybody is sending out the same messages, could this be considered spam? Some at the firm will be allowed to pen their own tweets.
We expect more firms to jump into the fray. Think of this way: Remember the debut of the ATM? While somewhat in dispute, it is believed that the first such device debuted at a Chemical Bank in 1969. Today, there are in excess of two million.
Clearly, the growth of social media will continue unabated. New uses and new technologies will most likely continue to appear at a rapid clip, perhaps outstripping the abilities of the regulatory authorities to keep pace. In the meantime, financial services firms and the legions of compliance officers are advised to watch for additional guidance as well as to establish policies governing the use of social media.
Published: July 17, 2012 By: