Social Media Making Inroads In Financial Services Sector, Survey Finds

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By Yin Wilczek

June 1 — Financial firms increasingly are allowing the use of social media—especially LinkedIn—for business communications, a new survey finds.

In a survey of 274 individuals with compliance responsibilities in the financial services industry, Smarsh's “Electronic Communications Compliance Survey Report” found that 72 percent allow LinkedIn for business purposes, compared to 39 percent in 2011.

The growth also is seen related to Twitter and Facebook. Forty-four percent of the respondents said they allow Twitter for business communications, compared to 14 percent in 2011, while 34 percent said they allow Facebook, compared to 23 percent in 2011.

The survey was conducted in February and March, and released May 28. The respondents included C-level managers, chief compliance officers and compliance staff. Sixty-four percent of the respondents were from registered investment advisers, 38 percent were from broker-dealers, and the rest worked in private equity firms, hedge funds and other entities.

Tight Restrictions 

Business communications are highly regulated in the financial services, and under Securities and Exchange Commission and Financial Industry Regulatory Authority requirements, certain content must be retained or monitored.

According to Smarsh, compliance officers also are becoming more confident in their ability to manage their e-communication retention and oversight responsibilities. For the first time in five years, “new and emerging channels” was cited as a concern for less than half of the respondents.

Nonetheless, a communications gap exists, Smarsh said. An average of 32 percent of firms that allow business communications through personal social media accounts don't have a social media archiving/supervision solution in place, it found. “That gap is 13 percent larger for firms that don't allow personal channels (but do allow corporate pages for business communication).”

Meanwhile, the number one factor contributing to respondents' lack of confidence in being able to promptly provide data upon request to regulators is the multiplicity of platforms on which the information resides, Smarsh said. The second challenge is the lack of familiarity with technology.

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Ryan Tuck at

The survey is available for download at