The social-media ball needs to be moved forward

Now that Morgan Stanley Smith Barney LLC has become the first major wealth manager to allow its brokers to use Twitter — albeit in a limited way — it’s clear that financial services firms are not waiting idly for regulators to provide guidance on social media.
The Financial Industry Regulatory Authority Inc., of course, has mandated that all Internet communication from regulated broker-dealers, including communication through social-media networks, be held to the same standard as any personal or written communication.
Since last year, Finra has kept saying that it is trying to figure out appropriate rules for public speech on social-media websites and blogs. For its part, the Securities and Exchange Commission has issued no formal guidance on social-media policies.
While the SEC has increased its efforts to make sure that registered investment advisers aren’t misusing social-media tools, they are not saying what actually constitutes appropriate use.
The lack of specific guidance from both regulators has resulted in a sluggish embrace of social media by the financial services industry.
Since social media keep growing, it’s time for Finra and the SEC to come up with workable, real-world ways for financial firms to use the new medium while still making sure investors’ interests are protected.
On the social-media front, Morgan Stanley merely is dipping a toe into the water; it’s hardly diving in.
The firm has developed and adopted a social media policy that allows it to create, control, monitor and archive the news and information their advisers will be communicating.
Working under current Finra rules, Morgan advisers cannot send any unscripted Twitter messages: Every post will be pre-approved by the firm. In the instantaneous world of social media, pre-approvals seem antithetical to the spirit and practice of the new medium, but that’s the way things stand at the moment.
At their disposal will be a library of pre-approved material covering market updates, economic and investment insights and wealth management topics.
“[Advisers] will have the ability, with the click of a button, to share pre-approved ‘status updates’ or ‘tweets’ with your social and professional networks,” Andy Saperstein, the head of U.S. wealth management, wrote in an internal memo to Morgan Stanley employees.
The program will start with a test group of 600 MSSB advisers and be expanded to include the firm’s 17,800 advisers within six months.
While these are small steps, they are steps in the right direction that other firms are likely to follow.
“I see this [the Morgan Stanley announcement] as big for the industry,” said Kristin Andree, president of Andree Media & Consulting, who writes the On Social Media column for InvestmentNews.
“With Morgan’s size, other companies will nearly be forced to follow suit if they want to keep up with the changing landscape of online news sharing,” she said. “Basically, this move should bring more companies in the industry into the social media game — one that most other industries are already entrenched in.”
Since Finra has begun to audit companies’ adherence to their own social media policies, Morgan will want to be sure its systems are working to regulate, monitor and retain the information appropriately, Ms. Andree said.
To that point, Morgan will install technology to capture and retain all communication that appears on approved social-networking sites.
Coming seemingly from nowhere, social media have proved to a powerful communications tool for individuals and businesses. Financial services firms can’t be left behind.
It’s time for Finra and the SEC to adopt intelligent social-media policies that protect investors while allowing advisers to communicate.

Jim Pavia is the editor of InvestmentNews.

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