When It Comes to Social Media Policy, Don’t Wait, Counsels Attorney Burns

Many practice management gurus recommend that advisors use social media, but actually doing so with an eye toward managing the risks inherent in social media is not such an easy task, argues Tim Welsh. Moreover, social media also carries a client risk. “If you have clients using Twitter, Facebook and LinkedIn,” says Patrick Burns, you’d better be using them yourself, if you want to be “communicating with them on the same level.”

Burns, president of Advanced Regulatory Compliance Inc., in addition to being the managing attorney at the law firm of Patrick J. Burns, and Welsh, founder of the advisor consulting firm Nexus Strategy, have published a white paper that explores the risk management issues of social media, includes a history of the media and limns the SEC’s current (if amorphous) approach to regulating social media.

The paper argues that “ignoring growing social media related compliance issues is a gamble and can leave your firm exposed to the risk of administrative penalties, reputational harm, or worse.” As for business opportunities, the paper says that “the rise of social media as the way people and businesses communicate will not stop and it will be the progressive firms that adapt to this new paradigm to create a long-term, competitive advantage.”

Burns (left) says that many advisors are wondering what, exactly, they should be doing to be compliant with the somewhat unclear messages the SEC is sending to advisors on social media. The SEC is also said to have sent our sweeps letters to some advisors asking to see documents related to their use of Facebook, Twitter, LinkedIn, Flickr, YouTube, and blogs. The sweeps letters purportedly also ask advisors to explain what the advisory firm’s policies and procedures are with respect to social media.

So what should advisors do? Burns suggests that advisors treat social media as they already do email, on which the SEC has also never gotten around, “after seven years,” he notes wryly, to finalizing specific rules, though every firm knows it must capture and archive all emails and produce those documents to examiners on demand. So on social media, says Welsh, “capture it at the source, and be able to produce on demand, for instance, ‘All your tweets from March 9.’”

The white paper—Navigating the Social Media Storm—recommends capturing social media activity through Enterprise Content Management (ECM) systems “as well as specific applications that are integrated into the major social networking sites” through Application Programming Interfaces (APIs) provided by the major social media sites. Welsh says he and Burns have “postulated that it would be great for someone to develop” a technology tool that could interact with an advisor’s CRM system to capture, monitor and then produce on demand all those archived tweets and Facebook status updates.