Getting Wired

Why should advisers bother with social media? “At this point, it is just important to be there, especially from a reputation standpoint,” says Stephanie Sammons, CEO of Dallas-based social media platform Wired Advisor. “There are millions of people who are researching people online. If somebody Googles your name and nothing comes up but random results that you do not control, it is not good for your reputation.”

Adviser Michele Suriano agrees, and she has started tweeting and blogging in addition to posting a LinkedIn profile. “Twitter is more of an outreach for impromptu announcements or forwarding of articles. Folks can see the latest things that I have been reading or mentioning,” says Suriano, President of Colorado-based Castle Rock Investment Co. “From Twitter, they can go to my blog, and get to know a little more about the services I provide and understand my values.” Her blog content focuses on things such as new regulations and fee-benchmarking issues. “My concern for potential or current clients is what they need to know now,” she says.

Many advisers have joined Suriano. Forty-three percent of RIAs (registered investment advisers) utilize social media professionally, while 41% of wirehouse brokers do, according to a 2010 report by Aite Group, LLC, a research and advisory firm focused on financial services. Of those using at least one social media tool professionally, 57% turn to LinkedIn, followed by Facebook at 35%, Twitter at 21%, and a blog at 13%. “One of the things I found most interesting is that advisers who make use of social media tools had on average greater customer growth and asset growth in 2009, and they were expecting greater growth in both those areas in the next year (2010),” says Ron Shevlin, an Aite senior analyst in Boston. “I do not attribute their higher performance to social media, but these advisers are just more aggressive about the use of technology in their marketing. They are so much more willing to experiment.” He thinks that recent broker/dealer and wirehouse moves toward loosening restrictions of social media stem in part from a concern that these advisers may look to competitors if their social-media efforts get too restricted.

Morgan Stanley Smith Barney made a splash this spring when it announced that it would let advisers post on LinkedIn and Twitter. “Our objective is to give our FAs a different way to engage with clients, and do that on a more-frequent basis,” says Lauren Boyman, Director of Social Media. At press time, MSSB had 600 advisers in its pilot program, with plans to roll out to the rest of its advisers within six months.

Merrill Lynch Wealth Management has a pilot program allowing advisers full interaction with clients on LinkedIn for business purposes, spokesperson Selena Morris says. “We have a few hundred financial advisers in pilot, with a full rollout expected by November,” she says. It also has begun a pilot program allowing advisers to use Facebook.

It is too early in the development of advisers’ social media strategies for best practices to have solidified, Shevlin says. “People are testing the waters to see what works. There is nothing that’s like a huge silver bullet,” he says.

However, Shevlin and others talked about social media keys for advisers to keep in mind:

1.  Have a goal and a plan. Advisers using social media need a strategic goal. “The strategic purpose is to communicate your brand consistently to your target audience, and what differentiates you from your competition,” suggests Todd Estabrook, Chief Marketing Officer for Commonwealth Financial Network. Commonwealth has let advisers use social media with interactive features turned off for awhile (only static content) but, after adding an Erado social media archiving solution, in June it began letting them interact with people via blogs, Facebook, LinkedIn, and Twitter.

LPL Financial started letting advisers use social media more than a year ago, and focuses on what it considers the three main channels: LinkedIn, Facebook, and Twitter. Marissa Fox-Foley, LPL Senior Vice President of Adviser Marketing, suggests three strategic goals for advisers.

First, social media allow for quicker communication. “Advisers have a need to communicate in real time with clients and prospects,” Fox-Foley says. “One of the worst things an adviser can do in a difficult market is to stop communicating.” Second, it has proved a fruitful way to get client referrals, through mutual connections. “Advisers often may not know that a particular client is part of a group or alumni association,” she says. “This opens up a new avenue, not to prospect blindly, but to go in with more information.” Third, it can help advisers build their brand. “Many of our independent advisers are the embodiment of the brand,” she says. “There is an incredible and untapped opportunity to help communicate a value proposition.”

Once they have a goal, advisers also need a marketing plan. “One of the things that people make a mistake with is thinking that social media is an island unto itself,” Estabrook says. “Social media is an integrated component of a comprehensive marketing plan.” Commonwealth encourages the independent advisers with whom it works to put together a written marketing plan each year.

The social media part of a marketing plan needs several elements, Sammons says: Clearly identify the goals, the target market, compliance procedures, who will maintain and manage the strategy, how much time the adviser plans to put into social media, and social media do’s and don’ts. “Make sure it is clear what the rules are for posting,” she says.

2.  Do not skimp on training and tools. Just because some people already use social media in their personal lives does not mean they understand how to use it professionally. To be approved to use social media professionally, Morgan Stanley Smith Barney advisers have to take a half-hour compliance training that touches on applicable FINRA (Financial Industry Regulatory Authority) guidelines, as well as IT security issues, how to log onto sites, and do’s and don’ts. “There is a lot of apprehension about using a different communications tool,” Boyman says. “A subset of advisers already is doing it but, to a lot of people, it is a new way of communicating.”

Commonwealth also has required training, including explaining the Erado archiving solution, that it makes available to advisers for free. Its internal marketing portal also educates advisers about topics such as how to set up an account on different social media, how to communicate­ in a way that satisfies compliance requirements, and current best practices. The portal also has a moderated forum where advisers can share social media tips.

Sammons thinks of this as a key issue. “I worry a little bit that firms are getting the technology in place for compliance, but then they skip to, ‘OK, let’s go for it,’” she says. “There needs to be an emphasis on education and training, so that advisers have a plan and a strategy in place, and understand the tools. They need training to understand the environment they are getting into; each social network has a different landscape and personality. They also need to learn the impact of their actions with each of these social networks.”

3.  Use LinkedIn for prospecting. Most advisers using social media use LinkedIn heavily for prospecting, Shevlin says. It has a couple of potential benefits along those lines. Adviser James Richardson, a Boston-based consultant at Bostonian Group, has a profile and utilizes the site to learn more about plan sponsors. “Anytime I have a meeting with somebody I have not met personally, I always go to LinkedIn to see what connections we have. It gives me a little more background on the person I am meeting with, and his personality,” he says. “Most of our business is referral-related, so this is just a way of expanding that.”

Adviser Suriano sees LinkedIn as a way to network proactively. “It is a smart venue to connect to potential clients,” she says. “If I find a plan sponsor that I want to meet, I can see if there is anyone I know in that person’s community and, if there is, I can ask for an introduction.”

4.  Think of Twitter and Facebook as satellites. Envision a blog as the central hub of an adviser’s social media efforts, and sites like Twitter and Facebook as satellites, Sammons suggests. A blog offers advisers more opportunity to create and publish their own unique thought-leadership content, and people also own their own blog content, unlike Facebook, LinkedIn, and Twitter, she explains. Fox-Foley recommends that advisers using Twitter and Facebook link to their Web site as part of a hub-and-spoke approach.

Look to Twitter as a real-time communications stream, Sammons says. “It is a tool for both consuming and sharing information; the majority of what is shared on Twitter are links to content across the Web,” she says. “It is a place to share your ideas and insight, but also to have actual conversations back and forth with people in your target audience.”

Suriano usually tweets once or twice weekly, and ideally would like to do it daily. “Mine are more content-oriented, versus random thoughts,” she says. “I talk about what is going on in the industry and how it impacts plan sponsors, and a little more on what I am doing personally: conferences I am at, upcoming speaking I will be doing. I am trying to mix in some personal, fun stuff.”

The frequency and tone of Twitter postings should feel consistent with an adviser’s brand, Estabrook says. “If you are a naturally talkative person, then post more frequently,” he says. “It needs to be natural to their voice.”

While people think of Facebook as useful in their personal lives, Fox-Foley says that advisers also can utilize it successfully for their practices, given the sheer volume of people on the site. “It is a great way to discuss events that are coming up that your firm is holding, and it is a client-networking opportunity. You can use Facebook to connect with prospects,” she says, “but it is a commitment to keep a Facebook page up-to-date and interesting.”

5.  Compliance plays a bigger upfront role in static content. In Aite’s 2009 adviser survey, 43% of advisers said their firm has a written policy about use of social media. Of that 43%, 84% said their firm’s policy prohibits or limits their use of social media. “The core concern has to do with the discernment of investment advice; this is a heavily regulated area,” Shevlin says.

Morgan Stanley Smith Barney advisers need to get their online profiles approved prior to posting, but the interactive­ communications with contacts that follow do not require pre-approval. “They will be able to have that back-and-forth discussion, so they can be true to what social media is about,” Boyman says.

Commonwealth has a similar compliance policy for posting. “On a social media site, their static content needs to be pre-reviewed by our compliance department. Regulators treat that as advertising, because it is static,” Estabrook says, “but they treat interactive conversations as live appearances.” He likens it to an adviser doing a seminar to attract new business: The materials that they hand out require pre-review, but not what they say in the seminar. The interactive online content must be captured, post-reviewed, and stored.

6.  Balancing compliance needs with social media’s nature is tough. As a registered investment adviser, Suriano does not work with a broker/dealer. “That is why my life is easier,” she says of her social media efforts. “Everything can be live and on the spot. I use my own judgment.” Her years of experience as an adviser make her confident that she has enough knowledge about how to be compliant. If she were at a wirehouse, she says, “By the time I had everything approved, it would be obsolete.”

Sammons comes from the wirehouse world, and recognizes the challenge of balancing the wirehouses’ legitimate compliance needs with social media’s inherent sense of spontaneity and informality. “It definitely can dampen your effectiveness,” she says of compliance requirements. “If it is going to be a situation where advisers can only post and distribute content that is firm-approved, then it becomes more broadcasting than engaging.”

How to get that balance? “That is a tricky one,” Boyman says. “Part of it is in our own internal processes, to make them faster and get things approved in a quick way.” Technology plays a role, too. Advisers working with LPL who do social media must subscribe to the Erado real-time archiving service, so that LPL has a record of their communications and can review them if needed. “It automatically captures and tracks interactive, real-time content,” Fox-Foley says. “The Erado solution goes a long way in achieving that balance.”

7.  Decide how you’ll define success. Asked how advisers should determine whether their social media efforts are successful, Sammons says, “You measure it in the size of your community, the quality of the following you have, the new relationships that you develop through the process, and the existing relationships that you strengthen, which can lead to new relationships.”

Financial-services providers appear to have tangible expectations. An Aite survey released in November 2010 revealed that two-thirds of the financial institutions surveyed said that, by 2012, they expect social media to increase customer retention, and about half expect their social-media efforts to generate revenue by then. Unfortunately, they cannot really establish cause and effect that clearly, Shevlin says. “Attribution analysis is just as much an art as a science,” he says. “Marketers tend to ‘get religion’ about something. They are not really thinking through the reality of this.”