Most advisors want to capture the more than $80 trillion in assets projected to move to the younger generations in what's being called the
That's also where the regulators are at, scouring posts on platforms like Facebook, Instagram, YouTube and TikTok to see how firms — and the influencers they hire, called "
"We ended up reviewing over a thousand social media communications as part of the review. An eye-popping 70% of them were noncompliant in some substantive fashion," said Ira Gluck, senior director of advertising regulation at FINRA, during a podcast released June 25. "We're going to see this trend continue, largely because younger investors respond well to this form of marketing, and it's relatively inexpensive from a customer acquisition standpoint."
Gluck was referring to a FINRA "sweep" of over 1,000 social media accounts dating back several years; the review informed FINRA's updated social media guidance in 2023 and its enforcement actions this year.
In March 2024, FINRA took its first enforcement action related to social media against M1 Finance, resulting in an $850,000 fine on charges that the robo-advisory investment platform used influencers to make unbalanced and misleading claims on social media. But these sweeps are much broader across agencies.
In recent months, the U.S. Securities and Exchange Commission has also taken action against RIAs for
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"The firms that have had these big fines, they failed to properly ensure that the content that was going out was not promissory, inflationary, really extreme," said Robert Sofia, founder and CEO of Snappy Kraken, a digital marketing provider for financial advisors based in Ormond Beach, Florida. "These influencers, by their nature, they thrive on clicks and views. And that usually happens when you push the boundaries of content. So these firms would give them enough information to be dangerous."
Social media — the go-to source for young investors that comes with regulatory pitfalls
But that does not mean advisors should stay away from posting on social media. These platforms carry billions of users, many of whom can transfer into clients. A
"As the father of two Gen Z children, I've seen this in action," Gluck said on the podcast. "Both of my kids get the vast majority of their news and information from social media, and usually that's their first stop when they're considering a new purchase. And even if it's not the determining factor, they often use that social media to validate their choice."
Social media platforms can be practical for prospecting and are where many newer tech-based financial platforms are finding their customers and growth.
"I will say, Instagram has been the most useful for us," said Nathaniel Robinson, founder and CEO of San Francisco-based Trustworthy, an online platform for consumers to securely store and gauge family information like wills and assets. Launched in 2020 and aimed at capturing younger generations in the great wealth transfer, Trustworthy now has 11,000 households signed onto its platform.
"We were running ads on Instagram for a while, and we got a lot of inbound interest from the advisor side of the business and financial services in general," Robinson said about the company expanding its platform for advisors to use with clients last year.
How advisors can use social media to find growth, avoid fines
One of the key components to advisors' compliant use of social media is in the disclosures. In general, advisors must clearly disclose whether a post is a paid advertisement and clarify their relationship with other entities involved in the communication, including with any influencer.
"It's important for customers to understand that they are viewing a marketing communication. People evaluate information differently if they know they are being sold something," Gluck said on the podcast, giving examples like placing "#promoted" or "#sponsored" in the social media post.
Even if no influencer is involved, using social media in a regulated profession like that of a financial advisor must be conducted in a more methodical and vetted manner than personal account posts. This means firms must carefully plan their target audience, craft a compliant message for the post and obtain approval from compliance beforehand. Of course, all of this takes time.
"From the time that we ideate content to the time that it gets through FINRA, back to us, through compliance at the firm and out by the advisor, it can be a month, six weeks, in some cases eight weeks," Sofia said. "But that's another reason why the type of content that you're doing needs to be strategic."
Sofia suggested having evergreen social media content prepared early that can include a reaction to events like a market correction, for example. So when the time comes, the firm can respond quickly online with content that's already prepared and approved by compliance.
Personalization was also a key point consultants raised regarding social media use. But personalizing a social message means the poster must know their target audience.
"The most successfully growing firms know their ideal prospect and personalize their messaging to that prospect," said John O'Connell, founder and CEO of The Oasis Group, a Monroe Township, New Jersey-based technology consultant for wealth managers and fintech firms. "For example, if your firm wants to attract small business owners who are seeking an exit in the next five years, then your messaging can discuss exit planning, succession planning, getting the company's financials in order with a professional bookkeeper, etc."
