At a meeting last week with a prospective client, while we were diving into freshly baked cookies (yes, that’s right, warm cookies, I love meetings in the Midwest), a compliance professional turned to me and asked me a question about “PAC files”.  Really?

At that moment, I realized that it’s time to change the conversation.

For more than 2 years, we have been discussing how to use social media while complying with the financial services rules and regulations. After all, Financial Industry Regulatory Authority (FINRA) issued its first Regulatory Notice 10-06 in January of 2010, followed by the Financial Services Authority (FSA), Financial Promotions Using Social Media, and then came Cir/ISD/1/2011 from the Securities and Exchange Board of India (SEBI), then more guidance from FINRA with Regulatory Notice 11-39 followed by Investment Industry Regulatory Organization of Canada (IIROC) issuing  11-0349, and the Securities Exchange Commission (SEC) alerts early this year, that included Investor Adviser Use of Social Media.  In addition, the National Association of Insurance Commissioners is drafting The Use of Social Media in Insurance. We have even seen the Massachusetts Securities Division issue a letter to Registered Investment Advisers on the use of social media.

Fundamentally, we are reminded by all these regulators that social media is just another form of written communications, and needs to be treated as such. Existing rules around recordkeeping, suitability, advertising, and supervision are media-neutral and all apply. Content, not the device is determinative. And the regulators are only interested in business communications. With the release of each new set of guidance, there are lively conversations about how to interpret and apply some of the rules to specific features across the social networking sites, however, at this point, the message is clear, spirit of the guidance is to protect the investor.

As none of the native social networking sites have ability to support these compliance requirements, project managers, IT and Security have been having their own discussions. Third party vendors have been identified, requirements outlined, demo after demo watched, pilots launched, RFPs written and evaluated, matrixes comparing vendors developed and analyzed, budgets submitted, resources assigned and contacts negotiated. In some cases, upward of 30 people from within the enterprise have been involved in all these conversations. No wonder the compliance professional had heard about “PAC files”.

In the meantime, the lines of business, marketing departments, investor relations, human resources, research, customer service, and savvy financial advisors are chomping at the bit to start using social media to nurture existing relationships, attract new clients, build brand awareness, share information, do recruiting and conduct research. Maybe they have heard the statistics: more than 47% of Boomers use social media in some form (Forrester Research, June 2011) and the heaviest users of social media, Gen Y (ages 18-30) hold more than $2.4 trillion in personal income and by 2025 will control more than 46% of the personal wealth in the United State (Javelin Research). They want to speak to the language of their clients and prospects. Or maybe, they have heard the stories about how financial advisors are beginning to generate business. Like the advisor at a large broker-dealer who captured a new $2 million dollar account after noticing that a LinkedIn connection had retired. Or the advisor who attracted a $1 million prospect after only 96 tweets and with only 51 followers.

So now that you ensured that your firm will be in compliance with the rules and regulations and you have decided which technology solution to use, let’s change the conversation. Let’s talk about training, integrated marketing, content strategy and measurement. And how you will begin to support your Financial Advisers’ use of social media to build their business.