Due to securities regulations, Wall Street firms have traditionally blocked employees from using social media tools such as Twitter and LinkedIn. However, these firms are now tiptoeing into the fast paced and open world of social media. Morgan Stanley recently announced that they plan to give 17,000 financial advisors partial access to Twitter and LinkedIn so to effectively communicate with their clients and tap into to a larger market.
The caveat to this exploration is that financial firms are limited in what they can say on social media. For one, there is huge downside financial and reputational risk if information is not within the scope of regulation. This is why, for example, all Twitter messages at Morgan Stanley are taken from a prewritten library of messages, and that all LinkedIn messages have to be pre-approved by Compliance.
Start-up firm Socialware is advising financial firms such as Morgan Stanley on its social media initiatives, and providing a software that helps pre-approve messages. Also, interestingly enough these financial giants are hiring “social media community managers” to lead the entrance into social media. These prove that there is an increased focus and willingness to invest in social media.
The questions to the class are: why is the profile of a financial firm on Twitter or LinkedIn so much different from any other business? Do you think it is a coincidence that Morgan Stanley is making these large social media strides given they were the lead underwriter in the Facebook IPO? Does pre-approval of messaging take away from the allure of social media and how do you think customers will respond?