The Real Risk
The majority of advisers still seem to be holding back from social networking, and many cite compliance concerns as the reason, according to a study by consulting firm Advisors Trusted Advisor. Fifty-eight percent of surveyed financial advisers don’t use social media, at least to market their firm or find new prospects. About 18% of advisers said they use LinkedIn and much smaller numbers use Facebook (5%); blogs (4.5%); and Twitter (3%) for those purposes.
McGovern said advisers who haven’t jumped into social media still have time to figure out how to use it and watch how competitors are using it, and they should be figuring out how, and if, it fits with their business. “We’re still in the early stages of this; no firm has completely figured out the path to success as far as social media goes,” he said.
The question that remains for advisers is: What is riskier, participating in social media or ignoring the phenomenon altogether? For some, their broker/dealer will make the decision for them. For those deciding if or how to participate, it might seem daunting.
Winterberg contended that the bigger risk is not getting involved in social media, because competitors are likely to get in front of people that way. As long as advisers abide by good practice and good principles, usage can build business and increase visibility in the community. “I think the larger risk is not being visible on social networking,” said Winterberg. “It’s a tough choice, but I think advisers and registered reps can be proactive.”
Bernstein said while there’s certainly more of a risk in the compliance aspect, that shouldn’t necessarily dissuade advisers. It won’t hurt them if they don’t use social networking, he said, but “it’s a definite opportunity that some advisers should look into.” He likens it to sending out a newsletter to clients. Of course, he adds, “by next week, they’ll be three other hot commodities.”Ellie Behling