Combine the fast, freewheeling world of social networking sites with the conservative, highly regulated world of financial advice and the reconciliation is bound to awkward.

The Financial Industry Regulatory Authority (FINRA) tried to address these challenges by issuing guidance in January to help firms establish procedures for communication with the public through blogs and social networking sites such as Facebook, Twitter and LinkedIn. While FINRA's goal according to CEO Rick Ketchum was to "ensure that firms and brokers use social networking sites in an appropriate manner," consultants said that many issues remain for institutions.

The guidance from FINRA had been anticipated for months as firms grapple with the exponential use of social networking sites. Catherine Hanks, founder of Strategic Compliance & Governance, a consultancy, says: "We've all been looking for clarification on this topic."

In the meantime, many firms opted for no policy at all. According to an October survey of financial advisors conducted by Aite, 57 percent said their firms had no written policy regarding social media. Of the 43 percent with a policy almost all (84 percent) prohibit or limit its use. The new FINRA guidelines "should benefit both camps," says Ron Shevlin, a senior analyst for Aite. "For the 57 percent without a policy, they obviously need one and these guidelines could jump start that. For firms that have taken a hard-line stance, a knee-jerk reaction to prohibit it, FINRA's guidelines may help drive usage by giving them a better understanding of appropriate and inappropriate behavior." According to the guidance, firms must retain records of communications on social media sites. They must adhere to "suitability requirements," so that all recommendations are suitable to every investor reading the material.

The Notice hewed closely to established guidelines for handling other electronic communications and left firms to craft their own policies; it also avoided some specific social networking dilemmas. For instance, Robert Ellis, leader of Novarica's wealth management research and consulting practice, says it's unclear how a firm monitors third party servers-from the likes of Twitter and Facebook - since they can't retrieve communications from those servers.

Even after the FINRA guidance "it remains a challenge to the industry to craft specific policies that allow firms to supervise their FAs in prospecting online and retaining those communications," says Hanks.

For now she recommends that clients survey their financial advisors to determine the most popular social networking site and agree to use only that one to make retention and supervision simpler. Better tools are coming, she says. She is encouraged by LinkedFA, a social media networking site being Beta tested by FINRA that's enables supervision and retention. Smarsh and Socialware also promise to allow monitoring and archiving.

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