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Smarsh CEO shares insights on social media compliance for advisers, broker-dealers

6 min read

Modern Money

Smarsh founder and CEO Stephen Marsh
Smarsh founder and CEO Stephen Marsh Smarsh founder and CEO Stephen Marsh

A recent InvestmentNews survey found Smarsh to be the leading provider of social media compliance software for financial advisers. SmartBrief recently caught up with Smarsh Founder and CEO Stephen Marsh and discussed the landscape for social media in the financial services sector. The following is an edited transcript of that interview.

What feedback do you hear from advisers and broker-dealers regarding their use of social media?

LinkedIn is still probably the most commonly used network in this space. Use of Facebook is increasing, but it is probably a second tier, and most companies have some kind of Twitter footprint.

A lot of companies are just now starting to implement the technology phase of their social media programs. For the last year or two, many firms were either in denial or still in a pilot phase. Now they are ready to get things rolling, so we are seeing a critical mass of customers start to adopt social media compliance tools.

Interestingly, a lot of companies start with their marketing departments. They use social media generated by those departments as a test case for compliance before they roll things out to their advisers.

What kind of social media archiving and compliance tools does Smarsh offer?

We have offerings that archive dozens of different social networks, including Facebook, LinkedIn, Twitter and YouTube. We also do enterprise social networks like Salesforce Chatter, Yammer and Jive. We offer full capability to archive, supervise and monitor those communications, just like a financial firm might for email. We also have the ability to search and reproduce them, but one of the key differences in what we do is we store social media content in an archive structure that is purpose-built for social media. We don’t take a conversation or thread and flatten it down to an email. We try to preserve the interactive, relational nature of those communications. You can search the archive for that specific social activity, rather than just a certain keyword.

When we reproduce the message for the compliance department, they are looking at a rendering of the social media almost exactly as it appeared originally on the social network. They see the original post. They see the comments. They see the whole thread of communication. … They are not just looking at a one-line excerpt out of context.

The compliance department also has full search capabilities. They can search by network or by action type. They can look for all posts, all images, all comments and even all “likes.” In addition to the search capabilities, we also offer the automated monitoring that proactively notifies the compliance department when certain things are happening on social networks.

What is the next “big thing” in financial services social media?

The use of video is growing pretty quickly in both the marketing departments at financial firms and by advisers themselves. Video is becoming much more widely used, so we hear from our customers that they need a different technology solution. You can’t really capture YouTube content or video content the same way you capture a Tweet or a Facebook post, so they need a different tool for that. It’s more of a web-archiving or video-capture technology where you have to have the ability to record, almost like a DVR, the video or audio played on someone’s website or published to YouTube. So even if YouTube pulled a video down, you’d still have a copy of it. You can think of it like a permanent DVR recording of primarily video, but it can also be audio. The ability to search what was said in those videos is still pretty cutting-edge technology for most firms. I haven’t heard that companies want or need that search capability yet, but it is definitely on the horizon.

What does Smarsh offer on the mobile side?

For mobile, we have a handful of different technologies that vary depending on the needs and goals of a company. They address not only email and text messaging, but also social media and instant messaging on mobile devices. Any of the activities you perform on a desktop or laptop, somehow translate to mobile and we have tools to capture those activities. Two years ago, a lot of the tools that archived social media on mobile devices either required a separate installation or they weren’t really optimized for mobile. You might have had a social media compliance solution that required you to route all your users and all of their activity through a proxy or a gateway.

What challenges do BYOD policies present when it comes to social media compliance?

The BYOD scenario presents challenges because a lot of firms don’t even have the ability to manage their employees’ personal devices. And if they do, they may not know a social media application has been installed or they may not have the ability to force that communication through a certain server or gateway. That used to represent a hole where many companies couldn’t archive and couldn’t manage social media activity. So now the industry has moved more toward an application programming interface (API) approach for social media compliance. The archiving and compliance solutions connect directly to the social network itself to capture the activity, so it doesn’t matter if the employee connected from a mobile device or desktop.

In which areas do you see the most growth over the next 12-18 months and why?

Larger banks and broker-dealers have slightly different problems they are trying to address. A lot of them are trying to move away from their on-premise email archiving solution. They recognize it is costly to maintain them and some of those systems haven’t kept up with the times in terms of the types of content they support. They’ve had to wait to get support for social media, audio and video. The time compliance departments are given to make a new communication tool compliant is shrinking. For the big banks and broker-dealers, there is going to be a lot of activity for Smarsh and cloud or software-as-a-service providers like us to help banks move their existing archives away from their old systems.

Across the board, social media is pretty hot right now. People are realizing that it is not going away and that is has a business use. It just took some time for companies to figure out what the use was and that it was real.