Investment companies have developed a significant Internet presence by helping people learn about finance, execute trades, retrieve account statements and more. But they’re lagging somewhat when it comes to social media.

Brokerages, mutual-fund firms and other investment entities are still trying to decide how to connect with customers and prospects through sites and applications such as Facebook, Twitter, YouTube, LinkedIn and their own Internet blogs.

It’s a given that more customers will want to communicate through these channels as social-media use expands. But like the rest of Corporate America, financial firms are still trying to determine the best approach.

“We’re all trying to figure this out,” said Amy Dobra, a marketing principal at the Vanguard Group.

Speaking at a fund-industry conference in Phoenix last week, Dobra described social media as “a shift in conversations enabled by technology.” It’s a way for investment firms to reach customers and potential new clients through different electronic channels while receiving a lot more feedback in the process.

Many firms already have a presence, sending out tweets and posting information on Facebook and other sites. Vanguard offers weekly blogs, with recent topics ranging from 401(k) plans to reverse mortgages.

Fidelity has been running a YouTube contest inviting viewers to develop videos playing on one of its advertising campaigns, dangling a $5,000 prize for the eventual winner.

Social-media comments typically are unstructured, spontaneous and loosely policed – a type of electronic Wild West.

And that’s a large part of the dilemma for investment firms, which operate in a highly regulated industry not conducive to spontaneity, informality or off-the-cuff comments.

Brokerages, fund companies and others must monitor their advertising and other public comments to avoid misleading statements or unsuitable recommendations.

Firms have a strict responsibility to supervise all of their public interactions, and they must keep voluminous records.

“If you’re going into social media, it’s vitally important that you have the records,” said Lawrence Stadulis, a partner at law firm Stradley Ronon Stevens & Young, during the Phoenix conference.

FINRA, for Financial Industry Regulatory Authority, which also oversees mutual-fund marketing, laid out some social-media guidelines earlier this year.

Because of record-keeping, supervision and other obligations, many investment firms so far have restrained their communication. Some companies even prohibit employees from using social media for personal use.

It’s no wonder that an industry with heavy legal oversight has preferred to dip only a few toes into the social-media pond rather than dive right in.

“Policies and procedures are extremely important,” said Melissa Callison, vice president of compliance at Charles Schwab.

Oversight becomes even more tricky when you consider many social-media comments are passed along to third parties, often with personal statements mixed in, such as through a Twitter action known as retweeting.

“Get prepared to cede some control to the community,” Dobra warned fund-industry conference attendees. “Conversations now are happening with people we didn’t necessarily know about.”

More financial firms will get involved in social media, especially as today’s teens and young adults mature into serious investors. But nobody knows what this will look like 10 years from now.

“It’s exciting that we’re on the cusp of change in the way we communicate,” Dobra said. “How it plays out is the million-dollar question.”


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