Financial advisory professionals now can use social networking to expand their businesses while still being in compliance with the Securities and Exchange Act of 1934.

The new site, http://www.linkedfa.com/ provides free membership to advisors and their clients. The privately owned Coral Springs, FL based allows financial advisors to retrieve records of communications between an advisor and a client, blog posts, comments and instant messages, along with shared documents and other public or private correspondence.

The site offers privacy settings that allow advisors to have one-on-one conversations with clients, which are logged as well. In addition, compliance officers who join the network can monitor client-advisor correspondence by setting keyword alerts.

Sounds promising, but mind that FINRA was not involved in the site’s development and last November established the Social Networking Task Force to look into issues posed by the use of internet based communications.

This scenario will be interesting to follow, especially since most financial services firms either restrict the use of social media sites or ban advisors from using them. I’m confident we’ll see more on this one.