Social media can be a great way for financial firms to connect with current and future clients. But believe it or not, it involves a bit of risk, too.
Consumer brands might be able to take creative liberties, but financial services companies live under a compliance microscope. Phrase something wrong, exaggerate a claim or even just make a poorly chosen “joke,” and you’re not just looking at reputational damage and loss of trust — you could even be looking at fines and penalties.
In this article, we’re looking not at what you should do on social media, but specifically at what you shouldn’t.
5 Things That Could Put Your Firm in Hot Water on Social Media
1. “Guaranteed” Investment Returns
Nothing raises the compliance department’s collective blood pressure faster than promising results. Terms such as “guaranteed,” “risk-free,” or “safe bet” are frowned upon by regulators including the SEC and FINRA. Financial markets are inherently unpredictable; any suggestion otherwise could be seen as deceptive advertising.
Do focus on educating your audience about strategies, risks and long-term approaches. Don’t promise certainty.
2. Unsubstantiated Performance Claims
A couple of your clients might very well have earned 20% last year. But if you lazily claim “our clients saw 20% gains last year” without proper disclosures and context, you could run afoul of marketing rules. Regulators require that performance numbers be presented with appropriate timeframes, risk factors and disclaimers.
And because space is typically limited in social posts, it’s difficult if not impossible to meet such high standards, making performance-touting a risky venture.
That’s not to say you shouldn’t highlight your successes, but you should take a different route. For instance, you can share client stories (with permission, of course) about financial milestones reached, such as buying a home or paying for college, without getting into exact investment returns.
3. Personal Opinions Disguised as Financial Advice
A financial advisor who tweets that “tech stocks are the only smart move right now” might think they’re sharing an invaluable insight, but regulators could easily see it as unqualified investment advice. It can also alienate followers with differing beliefs or risk tolerance.
It’s a common refrain of ours, but it bears repeating: Frame posts of education. “Here are some factors to consider when evaluating tech investments” or even an analysis of past technology-sector performance in comparable situations demonstrates your expertise without straying into one-size-fits-all advice.
4. Insensitive or Trend-Chasing Content
It might be tempting to latch onto trending memes or cultural events to stay relevant. We’d bet our bottom dollar you’ve seen brands trying (with varying degrees of success) to capitalize on the CEO caught canoodling on camera at the Coldplay concert or the Polish billionaire who snatched an autographed hat out of a literal child’s hands at the US Open.
But humor in marketing can also fall flat – or worse, offend and alienate people. Using it as a springboard for a sales pitch is a great way to lose credibility and damage trust.
If you want to be timely, comment thoughtfully on industry news or regulations. But avoid hopping on the trend train or making light of sensitive situations.
5. Not Reading the Room
Sometimes, what might be a good idea for some firms might not be the best idea for yours, depending on the context.
Case in point? In 2013, JPMorgan planned on hosting a Q&A session on Twitter. However, instead of the engagement they were seeking, Twitter users responded to the bank’s request for questions with snark, sarcasm and angry tweets about the financial crisis, how much their executives were making and assorted regulatory scandals. The event was quickly canceled, but not before the negative press took hold.
A Q&A with an executive could very well make for a great event … generally speaking. But some of JPMorgan’s past actions left it vulnerable to public criticism and scrutiny. (The format of the Q&A, which solicited very public feedback with no ability to moderate, certainly didn’t help.)
Financial Firms Have Different Rules for Social Media
Investment firms, banks and other financial businesses don’t need to avoid social media altogether. But they also must treat it differently than, say, lifestyle or retail brands.
A helpful start is to filter every post through these three questions:
- Is this compliant? (Does it meet regulatory standards?)
- Is this respectful? (Could it alienate or upset clients?)
- Is this useful? (Does it provide real value to the audience?)
By steering clear of risky language, avoiding exaggerated claims and respecting the sensitivity of financial conversations, firms can use social media as a channel for trust-building rather than troublemaking.
At Mischa Communications, we’ve helped plenty of financial firms develop compliant social media strategies that get results. Is yours next in line?