Learn more about why social media archiving is important to keeping your RIA firm compliant.
Investment advisers looking to grow and compete in today’s crowded, digital-led landscape often can’t afford to ignore the impact of social media. They also can’t afford to get it wrong in the eyes of regulators like the SEC. As an adviser, one of the most important things to do to stay on the right side of compliance is make sure to archive all of your social media content and communications.
Social media use by advisers triggers the requirement to retain records of all communications, written and oral recordings, posts, media, comments, and all content, as it is updated on the adviser's social media pages. Record-keeping has always been an important task for RIA firms. After all, you and your firm are responsible for maintaining true, accurate, and current records according to SEC Rule 204-2 and similar state rules.
Rule 204-2 states that firms must maintain copies of all advertisements, written and oral materials, all disclosures provided, and supporting documentation to back up the integrity and facts relied upon to create the advertising. RIA’s must retain versions of website content and social media profile(s). If emails are used to disseminate advertising, an archival system for emails can be used to retain these communications. Moreover, the RIA must keep evidence of reviewing such advertisements as part of its book and records for at least five years from the end of the calendar year in which the advertisement was published or distributed.
What needs to be archived?
According to the guidance on social media and other business communications, RIAs should archive all customer queries, advertisements, and posts associated with your social media accounts. (All this material would be covered according to SEC Rule 204-2 and similar state rules mentioned above).
While social media can be a valuable resource for firms to communicate with the public in many ways, it can be a tough road to navigate in terms of properly archiving material. It is advisable to employ archiving technology that takes the burden off your RIA and ensures compliance is maintained. RIA firms can use an automated archiving system to remain compliant and be well-prepared for audits, discovery, and any other information requests.
A Few Compliance Issues to Keep in Mind When Archiving Your Firm's Social Media
With the finalization of the SEC Marketing Rule, there a few areas RIAs need to be more wary of when creating social media content.
- Testimonials and Endorsements: The SEC’s new allowance of testimonials opens up the traditional RIA referral marketing play from a one-to-one, difficult-to-measure strategy to a scalable, one-to-many opportunity. However, it’s important for advisers to understand and adhere to the SEC’s guidelines, such as clear and prominent disclosures, and maintain records of written agreements with their promoters and endorsers as applicable.
- Performance: The SEC prohibits the publication of performance results without having a basis for the data and following several guidelines when disseminating performance advertising to any audience. In fact, it’s probably best for advisers to avoid sharing performance information on social media, since the potential for unintentionally stepping out of line with compliance is significant. The SEC’s guidance regarding performance information includes specific conditions on the presentation, including using net versus gross of fees results, specific time periods for comparison, proper disclosures, and consideration of the intended audience.
- Predictions: Avoid using social media channels to make predictions or to give blanket financial advice. Not only is this a red flag for compliance, but it could also be seriously detrimental to your firm’s reputation.
Learn more about the importance of social media archiving here.