NEW YORK ( TheStreet -- Financial firms are searching for answers to their social media questions since the Financial Industry Regulatory Authority doesn't appear to be telling them what they want to hear. FINRA published the 10-06 Regulatory Notice in January 2010 as a guide to broker use of blogs and social media Web sites. The notice however is basically the agency's previous guidance for advertising and client communication with little more than a nod to modern social media. Now private companies like Socialware and Facetime are stepping in to clear up confusion for financial firms. "I'm just now coming to learn the ways of FINRA," says Chad Bockius, the president of Socialware, which provides social media software for roughly 90 FINRA-regulated firms. Bockius points out that FINRA gives broad guidance to firms on its media regulations, whereas his company has created a standard for the firms to follow. "We basically wrote a playbook for our clients," he says. "They all want to do what other firms are doing." Socialware has written a guide on Notice 10-06 that it presents to the compliance officers of its financial services customers. For its part, FINRA believes its notice has been positively received and isn't aware that any firms feel it's lacking detail. The financial firms themselves say they want to be involved with social media, but are worried about fines. The general feeling from Socialware's Bockius is that if all the firms approach social media in the same manner, then FINRA won't be able to pick out individual firms and fine them. Or in other words, the group mentality could end up driving the standards. FINRA hasn't fined any firms for advertising or client contact violations in conjunction with social media to date. Sarah Carter, a vice president of marketing for FaceTime Communications, a Belmont, Calif.-based provider of Web security, management and compliance products, agrees with Bockius that financial firms are all asking what their competitors are doing. She also hears from her customers that none want to be the first to get a fine, but wish the guidance from FINRA was more specific. "The scope for misinterpretation (of 10-06) is very high," says Carter. Facetime's approach is to focus on the content of the message, not the medium, she says. "Is it an advertisement or a message to the client?," Carter asks. She points out a LinkedIn post could be viewed as an advertisement and in that case, retention should be applied accordingly.
Carter notes that Bank of America ( BAC) is effectively using Twitter for customer service and that Citigroup ( C) has mastered the use of Facebook to get friends to sign up for cards. She particularly likes Prudential's ( PRU) approach to instituting pilot programs for various groups within the firm. She thinks it's a great way to get an understanding of requirements for each group. "Social media needs vary among groups within each firm," Carter says. Bockius of Socialware agrees that a blanket mentality hurts firms. "Some organizations prohibit Twitter, but then analysts that need that news flow miss out," Bockius says. He singles out New York Life Insurance Co. as a company that's ahead of the curve, saying he's heard from that that their customers are demanding it. "My prediction is that there will be 100% adoption across financial services, because there is far too much value in it and the agents know it," Bockius says. "40% of advisors are violating FINRA and using social media anyway." FINRA believes that this number is inaccurate and suggests that the agents are violating their firm's policy, not FINRA's requirements. Victor Gaxiola says he started his own firm Gaxiola Financial Group in part because of frustration with being held back on the social media front while working for one of the big banks. "My wife and partner recently left Wells Fargo ( WFC)," Gaxiola says. "We decided to go independent because we were tired of how slow they were to embrace social media tools." Glaxiola says he now has a Facebook and Twitter page, along with a compliance department-approved Web site. "All our updates are going thru Socialware and our clients and prospects appreciate the additional engagement." FINRA says it has no problems with its firms hiring third-party vendors to monitor their online presence, but the agency clearly bristles at any suggestion by firms that it hasn't drilled down into the details. FINRA is continuing to hold meetings on social media adoption and doesn't think 10-06 will be the last word on guidance. -- Written by Debra Borchardt in New York. >To contact the writer of this article, click here: Debra Borchardt. >To follow the writer on Twitter, go to http://twitter.com/wallandbroad. >To submit a news tip, send an email to: firstname.lastname@example.org.