As is often the case, things are happening fast in the world of social media. This is especially true when it comes to the proliferation of proposed bills – mainly on the state level – to regulate its use in the business world.
For the independent financial advisors, this proposed regulation has come primarily in the form of rules that restrict broker-dealers from monitoring their advisors’ social media interactions with clients and prospective clients – a restriction that would directly contradict compliance requirements found in FINRA regulatory rules 2210 and 3010, respectively. There are currently over 60 proposed social media bills in the United States, with some of the highlights below:
- In Oregon, Sen. Bruce Starr (R-15) recently introduced S.B. 499.
- In North Dakota, Rep. Ben Hanson (D-16) recently introduced legislation, H.B. 1455.
- In Ohio, social media legislation introduced by Sen. Charleta Tavares (D-15), S.B. 45.
- In Connecticut, Sen. Martin Looney (D-11) has proposed S.B. 159.
These are just a handful of the bills popping up around the country. All of the legislation described prohibits activities directly required by FINRA rules and may lead broker-dealers to ban social media use.
This would be particularly harmful to independent financial advisors who are trying to reach younger, social media-savvy clients. According to Forbes, 40% of advisors said they had gotten new clients through Facebook, 25% through LinkedIn, and 21%through Twitter. Despite the uncertainty in the social media field, the use of social media tools like Twitter and Facebook is increasing, and 69% of advisors reported working for a firm with social media policies or guidelines.
Learn more about state-by-state social media bills affecting advisors here – and contact your representatives with your thoughts on these issues.