Managing Digital Profiles

With social media now a pervasive form of digital communication, businesses of all stripes are having to take extra care in how they cultivate their online personas. There are many pressures to build a presence, but they come with extreme risk. A single poorly worded tweet or an off-mark FB post can send an entire brand, or a career, spiraling downwards. Given this harsh new reality, we wondered how the investment management industry is managing its social media presence.

Are they leveraging social media to promote their firms and highlight company culture? Are they supervising employees’ posts? Is there a formal code of best practices in place? Which sites do they rely on as we progress (or regress, depending on your POV) into a social media-driven culture?

We brought up this topic with a number of our clients and industry participants. Below is a summary of those conversations. Some of what we uncovered surprised us.

Beyond a Website?

The starting point was asking firms about their current digital presence. Beyond a company website and a brief description on LinkedIn, most firms we spoke with typically avoid formalizing a voice online. Compliance was the biggest hurdle cited. In July 2018 the SEC reaffirmed that social media usage does indeed fall under securities laws. The SEC has made a point of actively applying the Staff’s 2014 Guidance on the Testimonial Rule to social media which expressly states that any public commentary made by a registered investment advisor could be perceived as a testimonial. Essentially, Financial Services firms have to be careful about what they say online, as those public comments could be construed by the SEC as endorsements, and therefore subject to the same level of scrutiny as marketing or promotional documents. The looming risk of an SEC infraction is certainly powerful enough to thwart any ambitious online branding plans!

Online Presence in the Recruiting Process

Social media is also being leveraged in an entirely different way. As a COO at a prominent hedge fund put it: “We started checking candidates’ mainstream social media accounts, and have found it to be very useful. It gives us a very good perspective about a person; the language they use, the pictures they post, etc. If gives us insights we don’t get from other sources.” Many firms admitted they checked candidate social media during the interview process and as part of background checks before offers are extended. A candidate’s online presence becomes part of the firm’s online persona as soon as they are hired. There’s a tacit acknowledgement that “we hired this person because we believe they fit our culture and will become an important part of our firm going forward,” so reputation risk remains high. If the candidate is easily discovered standing under a beer funnel, or posting pictures of weapons, or stating extreme religious or political views, or having a side business in cannabis, it can be problematic. (Frighteningly, these are not hypothetical examples – all are actual issues which have arisen in regard to investment industry candidates).