What’s Not to Like?

Can financial advisors use the “like” button—or can’t they? A blogpost darting around the Twittersphere this week made it sound like “no:”

While an RIA can presumably use a like button on a posting about new tax rules or on an article saying the economy is doomed, it would be unwise for RIAs ask [sic] people to “like” your firm or you. Similarly, seeking “fans” is a bad idea.*

If true, this would make it very hard for advisors to have Facebook company pages, since the only way people can follow your company on Facebook is by using the “like” button.

It seems very unlikely to us that the SEC would bury such a game-changing announcement to the thousands of advisors out there with Facebook pages (and the thousands more considering it) on page six of a seven-page agency bulletin. You can question the SEC’s competence and its cozy relationship with Wall Street, but accusing it of something that clueless takes things just a little too far.

It also seems unlikely to Blane Warrene, CEO of Arkovi (our social media compliance software partner). “Sounds like an over-interpretation,” he said, after speaking with Carl Cline, Arkovi’s chief counsel and a former NASD attorney. “You do have to be careful about using “like” buttons, but we shouldn’t overgeneralize.”

To clarify:

  • If you have a company Facebook page or a personal page you’re using for business, no need to panic. People “like” your page to follow you, not recommend you. The SEC’s language allows for this.
  • Be very careful about “liking” content on third-party sites, however—and consider resisting the urge entirely.
  • Don’t allow people to “like” content on your firm’s website or social media pages (or, failing that, delete the “likes”). This is clearly different from following you, and could reasonably be construed as a testimonial.

Until Silicon Valley starts consulting FINRA regs and the ‘40 Act when it names its buttons, we’ll have to live with some uncomfortable wording to get business done. As Blane said, “Facebook is an extraordinary platform for advisors to share content and information. They just have to use it wisely and correctly.”

*The spark for this claim was this passage in a recent National Examination Risk Alert by the SEC’s Office of Compliance and Examinations (emphasis ours):

Depending on the facts and circumstances, the use of “social plug-ins” such as the “like” button could be a testimonial under the Advisers Act. Third-party use of the “like” feature on an investment adviser’s social media site could be deemed to be a testimonial if it is an explicit or implicit statement of a client’s or clients’ experience with an investment adviser or IAR.

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