Financial advisers are putting themselves at risk by using social media, with fewer than half of firms having written policies about using sites such as Facebook and Linkedin, research has found.
Inteliflo’s fourth annual survey into social media usage found that although governance is increasing, with only a quarter of firms having policies in place in 2014, more work needs to be done.
Facebook is growing in popularity as a site for advisers to use for business, with 41 per cent using the site for business, compared with 36 per cent in 2016.
However LinkedIn is still the top social platform for business, with 59 per cent actively using it in 2017, down slightly from 60 per cent last year.
Asked why their company gets involved in social media, advisers said the top reason was to attract new clients, while other popular reasons included being seen to be keeping up with modern communication systems, communicating with existing clients and keeping up with financial news and events.
For the 27 per cent who don’t currently engage in social media, lack of knowledge and understanding about how to use it to provide business benefits remained a barrier for almost a third (31 per cent).
Others cited lack of time and resource as a reason for failing to go online to give a thumbs up or re-Tweet posts.
Nick Eatock, executive chairman of Intelliflo, said: “It is good to see that governance is increasing for social media usage but there are still too many adviser firms who are trusting to luck and not putting in place formal social media policies.
"The FCA has made clear what it wants to see in terms of governance. This includes the requirement for advisers to keep a record of all social media interaction.
"Relying on the social media platforms to do that isn’t good enough, which is why we’ve partnered with the Hearsay social media system, which guarantees a traceable time-line for all social media activity if used across the platforms.”
Scott Gallacher, financial adviser at Rowley Turton, said that he preferred to keep his business and social media lives separate.
He said: “I wouldn’t really use either (LinkedIn or Facebook) for communicating with clients. I makw Iight use Facebook Messenger on the odd occasion where the client is also a friend but generally I keep my clients off my Facebook friends list.”
Intelliflo surveyed 365 users of its software in July and August of this year.
In rules published back in March 2015, the regulator made it clear they could not stick to 140 characters if their lives depended on it and dictated how an adviser's Tweets could be construed as financial promotions.
In March 2015 the regulator said they do not want to prevent social media use but ensure that consumers are protected. The overarching principle the regulator spelt out is all communications with consumers must be “fair, clear and not misleading”.
The FCA stated any form of communication made by a firm is capable of being a financial promotion, but the key to whether it is pushing product according to the regulator is whether it includes an invitation to engage in financial activity.