Smarsh recently released its second annual Electronic Communications Compliance Survey report, revealing the findings of a survey of compliance professionals in the financial services industry. The report examines the concerns of compliance officers in today’s demanding regulatory environment and indicates significant challenges in practice for electronic recordkeeping and supervision, particularly for mobile devices, social media and websites.
“This year’s survey findings illuminate the shifts underway related to electronic communications compliance,” said Stephen Marsh, CEO and founder of Smarsh. “The retention and oversight of electronic communications has becoming increasingly complicated as employees are presented with a growing number of options to communicate-from instant messages and mobile devices to websites and social collaboration tools-and compliance officers must adjust quickly and comprehensively to mitigate risks to their firms.”
Mobile devices and communications a top concern
Over the last year, there has been a significant increase in the number of firms that allow a variety of mobile devices for business purposes. Extending compliance practices to oversee these communication devices is a top three compliance concern, cited by 63 percent of survey respondents. More than half of firms now allow iPhones, iPads, Android phones and tablets on the corporate network.
Last year, FINRA issued Regulatory Notice 11-39, stating that firms are required to retain, retrieve and supervise business communications regardless of whether they are conducted from a work-issued device or personal device. Archiving and supervision practices governing communication from these devices, however, lag behind those in place for laptops and desktop computers. Today, the majority of compliance professionals (65 percent) said they would have minimal to no confidence in their ability to produce text messages during examinations.
Firms adapt to social communication channels
New communication channels remain the second biggest concern for firms. However, organizations are adapting and increasingly taking steps to formalize their position on social media use. Nearly eighty percent of respondents indicated they have written policies to address use of LinkedIn, Facebook, and Twitter, a significant increase from the year before, when less than half indicated they had a policy in place. However, the findings reveal that when it comes to putting archiving and supervision systems in place for social media, most firms (more than 60 percent) have not yet taken action.
“Social media is following a similar adoption path to instant messaging and email,” said Marsh. “As with those communications channels, we are seeing firms first put policies in place. Then, they turn their attention to enforcement and how they can effectively and efficiently supervise and archive the communications – ultimately leading them to employ a technology solution.”
Websites in use, but retention and supervision systems lag
Most financial services firms have an online presence through their websites, which have become increasingly interactive with videos, slideshows, Flash and other interactive elements. Respondents indicated that website content was the second most requested communication type during regulatory examinations, second only to email. At the same time, 41 percent of respondents indicated having minimal to no confidence in their ability to produce website content during an examination, and only 35 percent reported having an archiving and supervision system in place for websites.
The full survey report is available for download at www.smarsh.com/compliancesurvey.
The Smarsh 2011 Electronic Communications Compliance Survey shed light on the electronic messaging compliance concerns of professionals in the field in a year that saw emerging challenges like social media and mobile messaging add complexity to the compliance landscape. In fact, almost four in every five survey respondents were concerned about new communication channels and methods of communicating. A year later, FINRA has reinforced its focus on social media and electronic communications in its 2012 examination priorities letter. The SEC also recently released a Risk Alert on social media after charging an Illinois-based adviser with selling fictitious securities on LinkedIn.
How are your peers supervising social media use at their firms? What are the top priorities for compliance departments with regard to supervising electronic communications, and how have these changed since last year? The time is clearly right to reexamine the attitudes and concerns of compliance professionals!
Smarsh is calling on compliance professionals in financial services to provide insight through a short questionnaire for this year’s compliance survey. Enforcing policy and supervising organizational use of electronic communications is an important part of a compliance department’s responsibilities, and the information culled from the day-to-day experience of those tasked with managing these growing challenges will truly shed some light on the related pain points and best practices.
Respondents to the survey will be the first to receive a copy of the survey results report when it is released, and for each qualified registrant, a donation will be made to one of four selected children’s charitable organizations:
- Boys Town
- Make-A-Wish Foundation
- National Center for Learning Disabilities
- The National Children’s Cancer Society
Be assured that all answers are completely confidential and anonymous, and will only be analyzed in aggregate. Learn more about the survey at Smarsh.com/ComplianceSurvey, and please forward on to any of your colleagues in the industry.
Using Wordle word cloud, this is a visual representation of the most common language used on the AdvisorTweets blog. Pat Allen did a fantastic job at analyzing what was happening in the world of financial advisors on Twitter, and Smarsh would like to continue that tradition on the AdvisorTweets blog.
With that said what would you like to see on AdvisorTweets? Want to submit a guest blog post and lend your voice to the community? Email firstname.lastname@example.org or send a tweet my way at @AdvisorTweets.
With the prospect of a U.S. default looming just a few weeks from now, would you guess that financial advisors on Twitter might be tweeting their own commentary? You would be right.
Of course, the media are seeking the perspectives of advisors and filing their own reports. But what AdvisorTweets.com celebrates is the visibility of advisors using self-publishing platforms (Twitter, blogs, podcasts, videos, etc.) to deliver their own analyses, as long, short and caustic as necessary. They’re on the line to anticipate and explain the impact of a U.S. default on their clients’ portfolios.
This is a high information-gathering and sharing time as shown by the high volume of tweets this week and especially today.
Here’s just a sampling of some of the tweets spotted in the AdvisorTweets stream and by using the site’s search engine.
Look what I came across this morning while doing my daily social site crawl.
The title–”FINRA’s 10 Commandments of Social Media Engagement for Financial Firms”–is what caught my attention. If there’s been one single comment I’ve heard about FINRA and social media, it’s that the “guidance” in last year’s FINRA Regulatory Notice 10-06 has left too much to interpretation. Commandments? That’s not been my sense of FINRA comments so far. (And remember that the industry is on high alert for some additional direction in a matter of weeks.)
Nonetheless, you may benefit from taking a look at this 43-slide presentation published yesterday by Glen Gilmore. According to his LinkedIn profile, Gilmore is principal of Gilmore Business Network, a NJ-based social media consulting firm, and a practicing attorney. He’s an adjunct professor of Digital Marketing & Social Media Law at Rutgers University. His presentation provides substantial detail on some of the issues facing FINRA-regulated entities.
As I pass this on, I’ll echo Gilmore’s disclaimer on page 3 of the deck–none of the content should be taken as gospel (as it were). Gilmore’s background is impressive and includes serving as a media source during the country’s anthrax crisis and mayorship of New Jersey’s eighth-largest city. But, no financial services experience is shown.
It’s been a good week for tea-leaf readers attempting to piece together the future of social media regulation for FINRA-related entities.
At this writing, at least two articles have appeared with some interesting detail on what was said Tuesday at the Insured Retirement Institute’s (IRI) regulatory conference in Washington. Check out:
- FINRA Prepares New Social Media Guidance for BDs is AdvisorOne’s coverage of “Social Media–The Latest Word,” a session with Joseph Price, senior VP for advertising regulation/corporate financing at FINRA, and Mitchell Bompey, executive director, legal and compliance at Morgan Stanley Smith Barney.
According to the article, Price said the additional guidance being prepared (to build on FINRA Regulatory Notice 10-06) would not upend social media systems that have been developed. The guidance is being reviewed by senior staff at FINRA and will be sent to the SEC in the “next week or two.”
(As an aside, I take issue with the reporter’s characterization of Morgan Stanley as having “pioneered the concept of allowing its advisors to use social media.” Cambridge Investment Research staked that claim exactly one year ago and others’ pilots went public before Morgan Stanley. When the history is written about how social media enabled advisors to became more authentic and relevant to their clients, we’re going to want to have the facts straight.)
- Finra’s Ketchum: Questions still surrounding social media, which is Investment News’ excerpt of the prepared statement made by Richard Ketchum, Finra’s chairman and chief executive.
But we’re partial to tweets here on AdvisorTweets.com, and the tweets made by conference attendees onsite using #GLRC2011 were especially intriguing. I’ve selected a few of them below. Thanks to the BGK Group Twitter accounts and to @jbreitfelder, whose re-tweeting some of these today pointed out the value of the hashtag. I hadn’t followed it in real-time.