Social Media

Lesson

In this lesson, we will discuss the importance of understanding and adhering to regulations and guidelines related to social media use in the financial industry. This includes the proper use of social media for communication with clients and prospects and the potential risks and consequences of non-compliance.

Practice Question #1

Which of the following is NOT a requirement for financial professionals using social media for communication with clients and prospects?

A) Obtaining content approval from their firm

B) Keeping records of all social media communications

C) Sharing only third-party content

D) Ensuring cybersecurity measures are in place

Select an option above to see an explanation here.

A) Content approval is required to ensure compliance with industry regulations. B) Recordkeeping is necessary for regulatory purposes and potential audits. C) Financial professionals are not limited to sharing only third-party content but must ensure all content is compliant and approved. D) Cybersecurity measures are essential to protect client information and maintain trust.

Terms

Social Media:: Online platforms that allow users to create and share content and interact with others.
Advertising:: Promoting products or services through various media channels, including social media.
Correspondence:: Communication between parties, such as emails or letters, often written.
Recordkeeping:: Maintaining records of business activities, transactions, and communications.
Content Approval:: Reviewing and approving content before it is published or shared on social media.
Third-Party Content:: Content created by someone other than the financial professional or their firm may be shared on social media.
Testimonials:: Statements made by clients or customers about their experience with a financial professional or firm.
Endorsements:: Public statements of support or approval for a financial professional or firm.

Practice Question #2

What is the primary difference between a testimonial and an endorsement on social media?

A) Testimonials are written by clients, while endorsements are written by the financial professional.

B) Testimonials focus on the financial professional's services, while endorsements focus on their character.

C) Testimonials are statements about a client's experience, while endorsements are public statements of support or approval.

D) There is no difference between testimonials and endorsements.

Select an option above to see an explanation here.

A) Clients or others can write both testimonials and endorsements. B) Both testimonials and endorsements can focus on services or character. C) Testimonials describe a client's experience, while endorsements express support or approval. D) There is a difference between testimonials and endorsements, as explained in option C.

Historical Example

In the early days of social media, a financial advisor shared a client's testimonial on their Facebook page without proper disclosure, leading to regulatory action and fines for the advisor and their firm. This incident highlighted the importance of understanding and adhering to social media regulations in the financial industry.