Those intermittent dashes of deft market analysis served on social sites like Twitter and Facebook betting on a bullish phase or next wave of bear market are not impromptu thoughts from uninformed investors. Many are now in the form a prewritten post drawn from a comprehensive library of customized messages dispatched by financial advisers at leading Wall Street firms tapping into the fast-paced realm of social media.

A powerful marketing opportunity

For Wall Street, social media constitutes a vast and powerful marketing opportunity to market initial public offerings, to effort to communicate with homeowners on mortgage policies, to discuss investment scenario and to predict the broader market movement.

Adept start-ups have emerged to guide social media communications by Wall Street’s firms, offering them software and advice because many of these organizations have hardly used the networks in the past somewhat similar to a scenario when people first started using the Internet for basic business purposes.

Social media compliance products, the new buzz

For example, Socialware, a start-up located in Austin, Tex., offers an array of social media compliance products specifically for the financial industry.  It also advises managers of financial firms on usage of social media. The company sells software, which can archive a library of prewritten messages and let compliance officers oversee postings. Its clients like Guardian Life, AllianceBernstein and Morgan Stanley Smith Barney have used the software to give their sales & marketing people access to Facebook, Twitter, LinkedIn etc.

According to Lauren W. Boyman, in-charge of social media operations at Morgan Stanley Smith Barney, internal statistics suggest that financial advisers are engaging with clients over these platforms  with reasonable success. Prewritten messages definitely help streamline the whole process.

Risks involved in fast-paced communications

There is a large firm regulatory framework within which the players everyone needs to operate. It’s not easy both for compliance officers and financial firms overseeing communication on social sites intended to issue random messages at a rapid-fire pace. It is necessary to stringently monitor communications to make sure they are absolutely in compliance with finicky securities regulations. The process can get time consuming.

The regulator last year suspended a broker in California, who recommended certain companies on Twitter without informing her employer she personally held stocks of some of them. Another investment adviser from Illinois was accused of offering to sell certain ‘fictitious’ securities on the professional network, LinkedIn.

Of course, even a small mistake can have wider ramifications. No surprise, only a select advisers and experts are permitted to use networking sites. Employees are generally blocked from even checking personal social and e-mail accounts while at work so that no wrong message is sent out.

Only a select group of financial advisers is allowed to write their own posts or messages on Facebook and Twitter. For, the financial word, it’s a new learning curve! The key is to build a real, regular following on social media sites through meaningful yet fully compliant content approved by the branding & compliance divisions.