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SOLVING THE RIDDLE OF SOCIAL MEDIA COMPLIANCE (Continued from Page 11)HOW NOT TOVIA SOCIAL MEDIADavid Edwards, president of wealth adviser Heron Financial Group, says he has learned a lot about the power of social media, particularly when not to cross the line.12by Eugene GrygoLearning the power of social media helps financial services firms understand how not to cross the line into noncompliance, says David Edwards, president and wealth adviser at Heron Financial Group.The New York-based advisory firm is “very marketing-focused” and thus a great fit with social media, Edwards says. “When I say ‘marketing,’ I mean we’ve very carefully defined our ideal client, structured our entire firm to serve that client, and all of our outreach efforts, whether social media or sponsorship, are designed to find, attract and deliver to that ideal prospect.”In fact, from his standpoint, Edwards says that there are two major approaches to social media: active and passive.“Passive social media is using the Internet to Google the hell out of people and get to know them before they even walk in the door,” Edwards says. The firm checks the LinkedIn pages, Twitter feeds and Facebook pages of prospective clients. “We also do a Google search looking for things like wedding announcements.”Proper archiving, monitoring and retrieval of social media interactions are now essential.Joanna Belbey, social media and compliance specialist for Actiance, a platform provider for social media governance, says that any embrace of compliance technology for social media will require not only buy-in from IT and data management staff but key stakeholders from a variety of internal groups, such as marketing and communications, risk management, governance and human resources. “That’s the key challenge, ... getting them all on the same page,” Belbey says.Before Actiance, Belbey ran a compliance training company and led the content development, marketing and delivery of up to 350 compliance educational programs per year for the FinancialCASE STUDY:Industry Regulatory Authority. “You need a champion to lead a conference call once a week and to talk about the risks and help to mitigate risks one by one,” Belbey says.Even after the teams and technology are in place, social media compliance can still be a little frustrating for firms, says Donald Runkle, who until earlier this year was the chief compliance officer for Raymond James Financial Services (RJFS). He left his post to join law firm Edgerton & Weaver, where he is the director of consulting services.Runkle says the major social media compliance lesson he learned from his time at RJFS was that staying on top of social media interactions may cost firms more than they expect.The firm even has a specialized tool called Referral Edge, which compiles, among other things, prospects’ property holdings “all over the country and who they’ve contributed money to in terms of political campaigns,” Edwards says. “If we know someone is going to send a lot of money to Mitt Romney, we’re not going to make Republican jokes.”By contrast, an active approach to social networks means using them to protect or enhance a reputation.“I know people are Googling me and I want to make sure that when they Google me, they find lots of good stuff, lots of high- quality content,” Edwards says.Of course, performance-related postings are among the social media activities that regulators want firms to avoid. These things have to be learned and Edwards says when his firm began its social media journey over the past several years he “knew nothing about social media at all. So I hired a management consultant to teach me.”Edwards and his firm had to learn fast because social media became a phenomenon much like email.“Twenty years ago, only a tiny handful of firms had email, and the compliance guys wouldn’t let their people use email, right?” Edwards says. “One day the dam broke and everybody’s using email, and it’s ‘Of course, you have to use it to do business.’ Social media is the same way. ... Generally speaking, you’re going to get the best results if you have [at least] a LinkedIn profile, which is your online resume, and a Facebook page, which is not necessarily your personal page,” he says.Edwards’ Facebook page features photos of him collecting trophies and attending key industry business parties.CROSS THE LINEFALL 2014 | FTF NEWS MAGAZINE