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Advisors may now be able to claim their Yelp profiles and use them for marketing purposes.
Recently, the Securities and Exchange Commission (SEC) published new testimonial and social media guidelines (SEC IM Guidance Update 2014-4) that cleared the way for advisors to use social media review sites like Yelp and Angie’s List. Such sites were previously restricted because they provided content that was generally seen as testimonials. While the new guidance may seem like a big leap forward for financial advisors who use social media, there are still many restrictions, so it is important to understand what you can and cannot do.
To understand what the SEC’s guidance means for you, you must be aware of some key passages from the SEC IM Guidance Update 2014-4. While I’m not a compliance expert, here is my understanding of the document. Consult your compliance officer or attorney prior to implementing any social media campaign.
If you can control the reviews, you can’t use it
If you have the ability to control the reviews on a site in any way, then all reviews on the site are considered testimonials and you cannot use the site. But sites that show all reviews – the positive and the negative – and do not enable you to delete or hide reviews, such as Yelp, are now acceptable.
Here is the SEC’s guidance: ”When an investment adviser or IAR has no ability to affect which public commentary is included or how the public commentary is presented on an independent social media site; where the commentators’ ability to include the public commentary is not restricted; and where the independent social media site allows for the viewing of all public commentary and updating of new commentary on a real-time basis, the concerns underlying the testimonial prohibition may not be implicated.”
Can You Use It? |
Yes |
Maybe |
No |
Yelp |
Facebook Business Page Reviews |
LinkedIn Recommendations |
Angie’s List |
LinkedIn Endorsements |
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If you show all reviews, you can promote it
The SEC guidance now allows you to publish reviews from these sites on your website, as long as all of the reviews are published, not a select few. If you decide to take advantage of this freedom, you should use a widget that automatically includes all the reviews. Otherwise, you may violate the testimonial rule if there is a delay between when a review is written on a social media site and when it appears on your website. The widget would link to the site where all reviews are found, so check with your compliance officer prior to using such a tool.
Here is the SEC’s guidance: ”An investment adviser or IAR’s publication of testimonials from an independent social media site that directly or indirectly emphasizes commentary favorable to the investment adviser or IAR or de-emphasizes commentary unfavorable to the investment adviser or IAR would implicate the prohibition on testimonials. The investment adviser may publish only the totality of the testimonials from an independent social media site and may not highlight or give prominence to a subset of the testimonials."
Can You Use it? |
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Yes
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Maybe |
No |
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Yelp Widget |
Excerpts from review sites |
You can show your friends, fans and followers, as long as you don’t imply a recommendation
You are now able to use pictures of those people who follow your social media profiles on your website. These won’t be considered testimonials as long as you don’t do anything that would make people think that the people shown are clients who are recommending you and your services.
Here is the SEC’s guidance: ”It is common on social media sites to include a communal listing of contacts or friends. The staff has stated that an advertisement that contains a partial client list that does no more than identify certain clients of the adviser cannot be viewed either as a statement of a client’s experience with, or endorsement of, the investment adviser, and therefore is not a testimonial. Such an advertisement, however, could be false or misleading under rule 206(4)-1(a)(5) depending on the facts and Circumstances.”
Can You Use it? |
Yes |
Maybe |
No |
Facebook "Like" Box |
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Google+ Badge |
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You may be able to show ratings
It appears that you can advertise ratings of your business from these social media sites, such as Yelp’s five-star ratings. Just like the reviews, these ratings have to reflect both the positive and the negative and cannot be under your control in any way.
Here is the SEC’s guidance: ”Investment advisers or IARs could publish testimonials from an independent social media site that include a mathematical average of the commentary provided that commenters themselves rate the investment advisers or IARs based on a ratings system that is not designed to elicit any pre-determined results that could benefit any investment adviser or IAR."
Can You Use it? |
Yes |
Maybe |
No |
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Yelp Ratings |
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Facebook Business Ratings |
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Good news, but still lots of questions
This new guidance is good news for firms that already had negative reviews posted about them on third-party social media sites like Yelp. Previously, the general consensus was that you could not claim a Yelp profile, so if someone had written a negative review of your firm, there was nothing you could do but let it sit on the Internet.1 Because Yelp is such a popular site, often these negative reviews would show on the first page of search results. Now, you are able to claim your profile and customize it to fit your brand and messaging. You can also hope that clients will post positive reviews to combat any negative reviews. By creating profiles on third-party social media review sites, you can proactively build a good reputation and not have to scramble to defend it when it is too late.
While this guidance may seem like good news, there are still some lingering questions that have not been answered:
- Are you able to solicit reviews from clients? It is clear you are not allowed to compensate anyone to write reviews (including people you supervise) and that you can’t write your own reviews. But it is not clear if you can solicit reviews from clients.
- Are you allowed to respond to negative reviews on these sites? There is a statement in the document that says, "The independent social media site, the investment adviser and the IAR may not provide subjective analysis of the commentary." What exactly does this cover?
- Are negative reviews considered a client complaint that needs to be addressed and reported to the regulatory bodies?
- Do these sites need to be archived? The answer is probably yes, so check if your archiving service is able to provide this for these sites.
Using a review site like Yelp may seem like a good idea for some firms. For others, it will be too risky, since there are so many unanswered questions. Think carefully before you jump on the Yelp or Angie’s List bandwagon and definitely consult your compliance officer or attorney before starting any new social media marketing campaign.
Kristen Luke is the CEO and President of Wealth Management Marketing, Inc., a firm specializing in outsourced marketing department services to Registered Investment Advisors and fee-only financial planning firms. For more information, visit www.wealthmanagementmarketing.net.
Read more articles by Kristen Luke
