Financial advisors at RIAs and broker/dealers have been busy jumping onto twitter and LinkedIn in recent months to connect with clients and show off their expertise. But small state-regulated RIAs may be taking a looser approach to updating their profiles than their bigger SEC-registered cousins.
A recent report from the Massachusetts state securities regulator shows that only a third of state-registered RIAs in Massachusetts have formal policies for keeping track of what they post. Meanwhile, a separate study from the Investment Adviser's Association shows two-thirds of SEC-registered RIAs have policies in place. About half of the firms in each group use one or more social media websites, according to the two reports. (Today, all RIAs that manage more than $25 million in client assets must register with the SEC, though that threshold rises to $100 million next year. All RIAs that manage less must register with the states.) Small RIAs tend to be more strapped for cash, and have less money to pump into compliance, so it wouldn't be a stretch to think that what's true of Massachusetts is true in other states.
There aren’t clear cut rules out there for RIA firms yet, anyway. But FINRA issued some guidance for broker/dealers at the beginning of last year—all activity should be tracked and archived, the regulator said. A number of broker/dealers have recently rolled out more permissive rules for their FAs. And many of the bigger SEC-registered firms have been using those b/d rules as a template, too.
So far, there is no coordinated effort among state regulators to address social media issues. But the North American Securities Administrators’ Association has put together an investor education group that may issue a report by mid-August. “The idea is to let people know that their online social networks are just as susceptible to fraud as their non-virtual social network,” says Bob Webster, director of Communications for NASAA.