New social media guidance from the U.S. Securities and Exchange Commission gives financial advisers the freedom to promote client reviews that appear on third-party social media sites.
Under the new guidance, financial advisors can include all commentary from a social media source or website as long as the advisor includes all of the mentions and doesn’t delete any negative feedback.
Now, advisors no longer have to worry that reviews by their clients on websites like Yelp or Angie's List could violate an SEC rule that forbids "testimonials.” According to Reuters, the new guidance clarifies that advisers registered with the SEC can direct prospective clients to those reviews in advertisements, subject to certain conditions.
“For example, an IAR could state in its newspaper ad ‘see us on [Facebook]’ to signal to clients and prospective clients that they can research public commentary about the investment advisor or IAR on an independent social media site,” the SEC said in a statement.
According to the SEC, client reviews do not violate its ban on client testimonials as long as they appear on independent social media or review sites, but those must let viewers see all public comments, whether good or bad. For instance, the reviews cannot appear in Facebook pages that advisers create to promote their own businesses as directing employees to write reviews or promising discounts to clients in exchange for positive reviews could spell trouble.
This SEC guidance is the latest step in a longtime effort by regulators to investigate how financial advisers can engage with clients online without breaking industry rules on advertising. "It's a pretty big change. It should make some people happy," said Cathy Vasilev, vice president of Red Oak Compliance Solutions in a statement.
To see the complete guidance, check it out online.
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