Data & Research December 11, 2014

Advisers Gain Clients and Assets Using Social Media

Two-thirds of advisers using social media for business say it has helped them gain new clients, leading to a median of almost $2 million in new assets generated per adviser.
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Financial advisers are making more use of social media than they were just a year ago, according to the Putnam Investments “2014 Social Advisor Study.” The analysis shows 66% of advisers using social media for business indicate that the channel has helped them gain new clients, up from less than half (49%) a year ago. Additionally, advisers acquiring new clients report booking a median of almost $2 million in new assets as a result, nearly triple the level compared to last year.

The survey reveals one-quarter (25%) of advisers use only one network for business purposes (down from 33% last year), while another quarter (25%) utilize four or more networks (up from 11%). LinkedIn remains the most popular business site, used as a primary social network by 55% of advisers. Facebook gained usage with 24% reporting a business presence on the network. Among advisers defining LinkedIn as their primary social network, the most prevalent use of the network is for connecting with other advisers and financial professionals. Among Facebook users, the main goal is enhancing current client relationships.

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“We’re seeing a remarkably rapid and dynamic evolution of social media use as advisers test ways to make this work for their practices,” says Mark McKenna, head of global marketing, Putnam Investments. “A year ago, the focus was almost entirely on business content and professional networking. Increasingly, advisers are leveraging the more personal side of social media and getting results.”

Survey results indicate the typical financial adviser using social media for business is active on an average of three social networks and has 11 years of industry experience. The typical adviser in the survey runs a book of business with an average of $84 million in assets and $900,000 in median client assets. 

Most advisers (75%) make at least some business use of social media, although female advisers are more likely than men to use social networks for business (82% vs. 73%). They are more likely to say that social media plays a significant role in their practice marketing efforts (67% vs. 52%) and likelier to obtain new clients through social media (71% vs. 64%). Additionally, the proportion of female advisers using social media for business has doubled over the past year, to 29%. Both genders remain about equal in terms of their median asset lift, Putnam says.

Looking ahead, research reveals the number of advisers using social media for business may be at a standstill. Of those not active, only 16% are “absolutely certain or very likely” to start in the next three years, and 21% are “somewhat likely” to do so. Advisers not using social media for business overwhelmingly cite compliance limitations as the main reason.

The study was conducted among 729 advisers nationally who have been advising clients for at least two years. The complete survey can be accessed here.

Compliance December 11, 2014

IRS Weighs In on What Records to Keep

An updated page on the IRS website shares what records retirement plan sponsors should keep and for how long.
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The Internal Revenue Service (IRS) notes that retirement plan sponsors are required by law to keep books and records available for review by the agency.

On an updated web page, “Maintaining Your Retirement Plan Records,” the IRS says saving these records will also facilitate answering questions when determining participants’ benefits.

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Plan sponsors should keep the plan and trust document, recent amendments, determination and approval letters, related annuity contracts and collective bargaining agreements.

The records kept are based on the type of plan sponsored. For example:

  • SEP Plans should keep Form 5305-SEP or 5305A-SEP as the plan document;
  • SIMPLE IRA plans should keep Form 5304-SIMPLE or 5305-SIMPLE as the plan document; and
  • Profit sharing, 401(k) or defined benefit plans should keep the plan document, adoption agreement (if there is one) and all plan amendments.

The IRS also says plan sponsors must keep trust records such as investment statements, balance sheets, and income statements, as well as participant records such as census data, account balances, contributions and earnings, loan documents and information, compensation data and participant statements and notices.

Retirement plan records must be retained until the trust or IRA has paid all benefits and enough time has passed that the plan will not be audited. However, the IRS notes that retirement plans are designed to be long-term programs for participants to accumulate and receive benefits at retirement. The Internal Revenue Code and Income Tax Regulations as well as the Employee Retirement Income Security Act (ERISA) require plan sponsors to keep records of these transactions because they may become material in administering pension law.

Some law firms have reported they are seeing a growing number of claims for pension benefits that were paid or rolled over decades ago by former employees who either do not recall receiving or rolling over their benefits or who are questioning the amount of benefits they received.

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