When developing a social media strategy for a financial planner just entering the digital space for the first time, what are the three main points to watch out for to legally protect the client in terms of communications?
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Addressing your question first required reaching out to a local financial planner to gather data. It was surprising to learn how restrictive policies for communications can be for planners (note that the following information is true for U.S. financial planners and may vary in Canada).
According to my contact at a major financial institution, investment consultants need to maintain compliance with Securities and Exchange Commission regulations and generally follow protocols and policies enforced by the Financial Industry Regulatory Authority (FINRA).
As the largest independent regulator for all securities firms doing business in the United States, FINRA aims to protect America's investors by assuring the securities industry operates fairly and honestly. FINRA oversees about 4,345 brokerage firms, about 163,410 branch offices and about 635,145 registered securities representatives.
It is not advisable for a planner to make public statements not in accordance with FINRA requirements. Penalties can be severe for the financial institution and the individual investment professional. Agents can be fined, censured, stripped of licenses and sued, in addition to any criminal repercussions. Further, anything put in print could be grounds for a lawsuit. Even incoming/outgoing e-mails and text messages are subject to SEC review.
Large financial institutions maintain strict policies regarding all financial planner communication. A compliance department must approve advertising. Planners may not even be allowed to share employment information on Facebook, but might provide selective information on LinkedIn. Anything that could remotely be considered advertising is restricted. Effectively, all communication of services and offerings must be done in person.
Given these facts, if I am interpreting "entering the digital space" correctly, your financial planner should be very cautious about any social media activity.