Ethics Center: Sales & Marketing

Advisor Alert: Active on Social Media? FINRA Has More Guidance for You

As the number of consumers using social-media networking sites continues to grow, FINRA has provided ongoing guidance for financial advisors wanting to promote their firms online without getting into trouble. In its latest Regulatory Notice (17-18), “Social Media and Digital Communications,” FINRA erects guardrails for the use of text messaging, hyperlinks and sharing, native advertising, and testimonials and endorsements.

Regarding text messages, FINRA allows advisors to interact with prospects and consumers via text messaging or other forms of online chat. However, the advisor’s firm must have the capability to retain records of those communications.

As for hyperlinks and sharing, FINRA warns advisors that if they post a URL to independent third-party content (such as a video or article) into their own content, the third-party content should adhere to the same standards as the firm’s own content. In other words, it should be based on the principles of fair dealing and good faith, be fair and balanced, and provide a sound basis for evaluating the facts about a specific security.

Furthermore, the content should not be false, exaggerated, unwarranted or offer misleading or promissory claims. However, if the linked content includes third-party links, then advisors will not be responsible for the content on that page.

Also, advisors may use so-called native advertising—defined as ads that mimic a publisher’s own online content—as long as they comply with FINRA Rule 2210 (fair, balanced, not misleading, etc.) and make sure their name is prominently displayed in the ad.

Finally, advisors who receive unsolicited third-party testimonials on a social-networking website do not have to treat them as communications under Rule 2210. However, if they did solicit the feedback, then they must comply with the three requirements of the rule [Rule 2210(d)(6)]:

  • The fact that the testimonial may not be representative of the experience of other customers.
  • The fact that the testimonial is no guarantee of future performance or success.
  • If more than $100 in value is paid for the testimonial, the fact that it is a paid testimonial.

Bottom line from the National Ethics Association: Financial regulators have now provided detailed guidance on how to leverage social media for marketing purposes. To prevent regulator scrutiny, be sure to operate within their bright lines. If you’re not sure how to proceed, ask your compliance team for assistance. Good luck!

For information on affordable E&O insurance for low-risk insurance agents, investment advisors, and real estate broker/owners, please visit For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.