Businesses are increasingly connecting with customers via social media such as Facebook, LinkedIn and Twitter. An online advertisement, which could be a tweet or a Facebook page, may be a consumers’ first point of contact with a business. It may then continue to being a source of information.
The challenge for financial advisers, from a regulatory perspective, is to understand what they can and can’t say in an online advertisement; what information is essential in an online advertisement; and what the best channels are for online advertising.
The Australian Securities and Investments Commission sets this out in ASIC Regulatory Guide 234: Advertising financial products and advice services: Good practice guidance.
In ASIC’s view, advertisements need to give a balanced impression so that consumers can understand the nature of the financial products or the advice service being advertised. This is so that the overall effect of the advertisement creates realistic expectations about a product or service.
However, there is a conundrum for advisers who use social media such as Facebook and Twitter.
In the case of Twitter, the challenge is to come up with the best advertisement for a company in only 140 characters.
The level of difficulty is compounded because the tweet can’t use language that creates an unrealistic expectation, and the benefit of a company’s services should be balanced against risks, disclaimers and warnings. Full disclaimers or warnings can’t be housed on another website to correct a misleading impression that you may have created.
Effective advertisements may generate a lot of interest in a company but poor advertising may result in a visit from the regulator.
The reality of Twitter and the benefit of advertising through Twitter is simply to create brand awareness and recognition through plain and simple text spamming.
In the case of Facebook, another interesting point to consider is what to do if, and when, there are negative comments posted on the page. Regardless of whether the comments are true or untrue, it is wise to remove that post?
Removing all negative posts and thereby leaving only positive or neutral comments on Facebook could create an ‘unbalanced’ overall impression.
However, leaving negative posts up could do harm to a business’ reputation.
Of course, in all likelihood, until action is taken against advisers for doing the above, the points raised may be all too academic.
Charlie Huang is senior professional standards consultant at Associated Advisory Practices.
