Social Media: What’s Holding the Industry Back?

Twitter just turned seven, Facebook nine and LinkedIn 10. That’s old in Internet years. So what’s taking the finance industry so long to join the party?

Compliance is widely considered the main hurdle, but is that really what’s holding the industry back?

While there are a few main things firms and advisors need to address, including record keeping, supervising business communications and content requirements, generally the rules shouldn’t be too hard to follow, says Joe Price, the senior vice president of corporate financing and advertising regulation for FINRA, and a panelist at LinkedIn’s Finance Connect conference in New York last week.

“I don’t think the rules of the road are overly complex,” he says. “There are pretty straight forward principles to apply.”

Price acknowledges the rules are not hard and fast, but says they were purposefully designed to be flexible to keep up with a rapidly changing environment. Price gave an example of where the flexibility comes into play: An advisor having to “like” a page to participate in a conversation doesn’t necessarily mean that the advisor “likes” all the content on there. “It’s not that hard if you keep the principles in mind,” Price adds.

The rise of new compliance software companies and technology providers that can help automate the process makes it even easier. Even so, there’s no doubt that social media adds to the compliance department’s work load.

At the same time, social media presents an enormous opportunity for compliance professionals says panelist Lisa Shalett, the head of brand marketing and digital strategy for Goldman Sachs (formerly the chief operating officer of global compliance, legal and Internal Audit). “I’d see this as a golden opportunity that in a career, maybe if you are lucky, comes along once,” Shalett says. “Become an expert in social media, it’s a gimme right now. For compliance and legal, I’d say don’t miss the chance.”

In another session she urged attendees to think not just of the risks involved in using social media. “There’s a consequence or a risk to not doing it,” she says.

So if compliance isn’t the real obstacle, what is? Content, but it’s not a matter of quantity. “All brands are now content publishers,” says Shalett. In fact, they are “content machines,” she says. But that still doesn’t solve the problem.

The real difficulty is in figuring out how to modify that content into “snackable” (a buzz word at the conference) and visual items that are appropriate for the audience on a given social platform. “That’s the challenge, taking a white paper and making that ‘snackable’ for LinkedIn,” says Tatiana Howard, the managing director of Schwab Advisor Services Acquisition and Marketing for Charles Schwab and a panelist at the conference.

These firms are “tremendously challenged” to come up with content that is relevant for different channels and audiences, Shalett says. “I am responsible for channels that are very hungry.”