Among Facebook’s more than a billion users are a growing number of investment advisers who use the network, as well as other social media sites such as Twitter and LinkedIn, to communicate with clients and prospect for new business. The migration into social media has state and federal regulators and investment advisory firms wrestling with how to update, tweet, like, blog and otherwise participate in social networking without running afoul of compliance rules.

Morgan Stanley began a pilot two years ago with 600 financial advisers using LinkedIn and Twitter. “This pilot was a success, and the ability to utilize these social media has been extended to all of our advisers,” says James Wiggins, managing director of corporate communications for Morgan Stanley Wealth Management in Purchase, New York. “As of this July, 4, 300 of our FAs had gotten engaged with LinkedIn, Twitter or both.”

Morgan Stanley advisers can send pre-approved tweets featuring market, investment, and wealth management commentaries, and topical messages such as holiday greetings, says Wiggins. On LinkedIn, they set up personal profiles and engage with others on the social network. “While this program is still in its early stages, many of our advisers have reported success staying in touch with clients and bringing in new business as a result of their social media presence,” says Wiggins.

Morgan Stanley keeps a tight rein on the program. Financial Advisers (FAs) need to take an online social media tutorial and the firm helps with marketing and website construction and maintenance. Even LinkedIn profiles have to be approved, though FAs can make connections on LinkedIn and ask for introductions by themselves.

While using pre-approved material may work against spontaneity, it also reduces the need to monitor thousands of FAs. Ara Jabrayan, a compliance consultant in Boca Raton, Florida says most bigger firms use pre-approved messages and templates. “They don’t want to deal with thousands of reps coming up with thousands of postings and sending them to compliance for approval,” he says. “It creates a pretty big burden.”

Social networking for investment advisers isn’t as easy as simply opening up a Facebook account. “Investment advisers are finding there is a use for social media,” says Paul Glenn, special counsel for the Investment Adviser Association. “But there are some lines they probably should be alerted to.”