Webinar presentation featuring Yasmin Zarabi (VP of Legal and Compliance, Hearsay Social) and Stephen Selby (Assistant VP of Social Media Strategy, Audit & Regulator Relations, LIMRA), moderated by Victor Gaxiola (Sr. Customer Advocacy Manager, Hearsay Social). #HScompliance

1. SOCIAL MEDIA COMPLIANCE:
COMPLIANCE FOR THE FINANCIAL
SERVICES INDUSTRY IN 2016
#HScompliance

2. HOUSEKEEPING
• This session will be roughly 45 minutes long.
• This is being recorded – a replay will be available
after the webinar.
• During the live webinar, please ask your questions
using the Go-To-Webinar console or join the
conversation on twitter using #HSCOMPLIANCE
• The information discussed today is the presenter ’s
own opinion and should not be construed as their
respective company's views or as legal advice –
please consult with your own firm’s compliance or
legal department with applicability of the rules to
your firm’s policies.
#HScompliance

3. PRESENTERS
#HScompliance
@YasminZarabi @StephenFSelby @VictorGaxiola

4. TODAY’S AGENDA
• THE STATE OF SOCIAL COMPLIANCE
• TRENDS & IMPLICATIONS IN 2016
• LOOKING FORWARD: SOCIAL & BEYOND
• CLOSING STATEMENTS
#HScompliance

5. MASSIVE DIGITAL TRANSFORMATIONS
MOBILE
SOCIAL DIGITAL
6
Hours average American
spends per day on social,
mobile, digital
#1
Social is top Internet
activity, surpassing
email
87%
Millennials always have
their smartphones on
them
#HScompliance

6. FINANCIAL ADVISORS AND SOCIAL MEDIA
81%
are using social
media for business
53%
gained over $1M in
new assets
79%
gained new clients
via social media
71%
who gained assets
were active on a
daily basis
$4.6MAverage Asset Gain
2015 PUTNAM SOCIAL MEDIA SURVEY
Source: 2015 Putnam Social Media Survey
https://www.putnam.com/advisor/content/advisorTechTips/2488-2015-putnam-investments-social-advisor-survey
#HScompliance

7. SOCIAL MEDIA:
BALANCING THE RISKS & REWARDS
REWARDS RISKS
Being findable online is table-
stakes
Stronger client relationships
Improved client retention
Compliance with industry
regulations
Advisors are on social, putting firm
at risk, even if it is outside of policy
Missing business opportunity
#HScompliance

8. KEY INDUSTRY & REGULATORY CHANGES
FINRA 10-06:
Guidance on
Blogs and Social
Networking Web
Sites
FINRA 11-39:
Social Media
Websites and the
Use of Personal
Devices for
Business
Communications
FINRA 12-29:
Communications
With the Public
SEC Guidance
on Testimonial
Rule and Social
Media
FFIEC
Guidance
on use of
Social Media
SEC approves
social media
OK with RegFD
FINRA Proposed
Amendments to
Communications
Rule, Regulatory
Notice 15-16
SEC Proposed
Amendments to
Form ADV
SEC
Guidance on
Testimonial
Rule and
Social Media
FINRA
Broker Check
Rule
Regulatory
Notice 15-50
#HScompliance

9. • Implement a supervision system
“reasonably designed” to achieve
compliance.
• Supervise employee communications.
• Principals must pre-approve static
content.
• Monitor online/interactive content and
messaging
9
4 PILLARS OF SOCIAL MEDIA COMPLIANCE
SUPERVISION
RECORD
KEEPING
POLICY &
TRAINING
CONTENT
• Capture and retain all postings on
social media for 3 years from the
date of last post
• First 2 years in accessible place.
• Set and document a policy.
• Train employees on policy.
• Follow up on red flags when
employees break policy.
• Only put out content that is fair and
balanced.
• Don’t provide financial advice without
understanding client’s financial
situation.
FINRA Rule 2210, FINRA Rule 3110,
FINRA Regulatory Notices
10-06 & 11-39
FINRA Rule 3110, FINRA Rule 2210 (b),
SEC 17a-3 & a-4, FINRA Regulatory
Notices 10-06 &11-39
FINRA Rule 2210, FINRA Rule
3110, FINRA Regulatory Notices
10-06 & 11-39
FINRA Rule 2210, FINRA Rule 2111,
Advisers Act Rule 206(4)-7 ;
FFIEC Guidance
#HScompliance

10. CONTENT PRACTICES
Can advisors create
their own posts?
Yes
77%
No
23%
14%
24%
62%
Post-review
Pre-approval if alert
Requires pre-approval
If they can write original content…
What workflow does it go through?
Natively
Hearsay
Social
Only
#HScompliance

11. REVIEWING IMAGES
0%
6%
57%
31%
6%
Cover Photo
only
Profile Photo
only
Cover &
Profile
Photos
Other No, Neither
Does your firm monitor/supervise profile
photos and cover photos?
#HScompliance

12. SKILL ENDORSEMENTS ON LINKEDIN
14%
17%
49%
20%
Oher
Only Specific
Endorsements
No
Yes
Do you allow users to accept skill
endorsements?
14%
49%
37%
Sometimes
No
Yes
Allowed to give others skill
endorsements?
#HScompliance

13. LEXICON PRACTICES
20%
53%
27%
Started w/list
from Hearsay
Social
Leveraged
existing email
lexicon
Other
Where did you develop your lexicon
from?
3%
93%
3%
Yes No Other
Do you share the lexicon with users?
#HScompliance

14. Hearsay Social Audit Task Force
Reports cover three areas:
– The workspace & social media accounts
– The post and its attachments
– The review & approval history
Audit Experience Includes:
• 20 Audits (including FINRA, DOL, state, and
internal audits)
Audit Trends:
– Majority of recent audits are focused on reviewing a
few individual reps over a particular time-span
SUPPORT OF THE AUDIT PROCESS
100%Success Rate with
Customer Audits
#HScompliance

15. TODAY’S AGENDA
• THE STATE OF SOCIAL COMPLIANCE
• TRENDS & IMPLICATIONS IN 2016
• LOOKING FORWARD: SOCIAL & BEYOND
• CLOSING STATEMENTS
#HScompliance

16. FINRA
RETROSPECTIVE RULE REVIEW
#HScompliance

17. RETROSPECTIVE RULE REVIEW: ACTION PHASE
Board Report
published
Public
Communications
Committee (PCC)
convened
New interpretive
questions and
answers published
Ø Disclosure
considerations
Ø Social Media
#HScompliance

18. FINRA RETROSPECTIVE REVIEW OF COMMUNICATIONS RULES
Stakeholder Responses
FINRA should clarify firms’ obligations with
respect to links to content on third-party
websites and posting third-party content on the
firm’s website
• In the ensuing action phase, FINRA staff will consider proposals or other initiatives resulting from the assessment phase.
• FINRA has already appointed a Public Communications Committee to obtain the input of industry and compliance
experts on matters including social media.
FINRA should provide increased flexibility
and clarity on the application of its rules to
social media and mobile communications
67% 6% Neutral
27% Disagree
FINRA Member Responses
Agree
63% 3% Neutral
34% Disagree
Agree
#HScompliance

20. DEPARTMENT OF LABOR:
REVISING THE DEFINITION OF FIDUCIARY
#HScompliance
CURRENT STATE
• Hard to become a fiduciary
• “Qualified plans”
– 401(k)s
– Contributory 403(b)
• Ongoing relationship required

21. DEPARTMENT OF LABOR:
REVISING THE DEFINITION OF FIDUCIARY
#HScompliance
CURRENT STATE
• Hard to become a fiduciary
• “Qualified plans”
– 401(k)s
– Contributory 403(b)
• Ongoing relationship required
FUTURE STATE
• Expansion into IRA market
• Hard to avoid fiduciary status. Do
you…?
– Service “qualified” plans or their
participants?
– Are you providing advice = Buy,
Sell, Hold or rollover?
– Did you create, directly or
indirectly the expectation that you
would act as a fiduciary?
• Written contract?
• Verbal contract?
• Unintentional?
• No ongoing relationship required.

22. TODAY’S AGENDA
• THE STATE OF SOCIAL COMPLIANCE
• TRENDS & IMPLICATIONS IN 2016
• LOOKING FORWARD: SOCIAL & BEYOND
• CLOSING STATEMENTS
#HScompliance

23. • Client expectations changing
• New regulatory updates
• New ways for users to engage
KEEPING UP WITH CHANGES
#HScompliance

24. FIRMS PRIMARILY FOCUS ON CORPORATE DIGITAL CHANNELS
NEW Digital Direct
Corporate Website
Direct Channels
Mobile App
Self Service
Existing Advisors
Social
Web
Email
Text
Clients
#HScompliance

25. SHIFT TO UNIFIED, OMNICHANNEL CLIENT EXPERIENCE
Corporate Office
Corporate Website
Direct Channels
Mobile App
Self Service
Clients
Producers
ü Social media
ü Agent Website
ü Email
ü Text messaging
#HScompliance

26. REQUIRES OMNICHANNEL COMPLIANCE & SUPERVISION
SOCIAL FOR
ADVISORS
OTHER
CHANNELS
ADVISOR
MESSAGES
(SMS)
ADVISOR
SITES
ADVISOR
EMAIL
UNIVERSAL COMPLIANCE &
GOVERNANCE PLATFORM
#HScompliance

27. CLOSING STATEMENTS
#HScompliance

28. TODAY’S TAKEAWAYS
Client expectations and technology innovation rapidly
changing; advisors are adapting.1
2
Leverage agile technology to supervise, monitor and
recordkeeping in accordance with your policies.3
Regulatory tsunami requires strong compliance program.
#HScompliance

29. 4TH ANNUAL SILVER BOWL AWARDS
Recognizing excellence, innovation, and achievement for the use of
social in financial services.
2016 SilverBowl Award Categories
• Best Use of Social for Customer Service
• Best Use of Social for Consumer Education
• Best Use of Social for Recruiting
• Best Use of Social for Social Good
• Best Use of Social by an Agent/Advisor
• Best Social Advisor Program
• Best Integrated Social Campaign
• Best Use of Social from a Company Operating Outside the U.S.
Email: SilverBowl@LIMRA.com
Website: www.LIMRA.com/SilverBowl
#HScompliance

30. THANK YOU!
#HScompliance
@LIMRA
@StephenFSelby
@HearsaySocial
@YasminZarabi
@VictorGaxiola