Ask most advisors about a particular hedging strategy designed to address market volatility concerns and they will share their point of view without hesitation. Inquire about social media’s value in meeting their firm’s growth objectives? That’s a different story. No financial services marketing tool in the past dozen years has attracted so much attention and created so much confusion as digital and social media.
It’s easy to understand advisors’ ambivalence about embracing social media as a tool for client acquisition and education. Obstacles abound: the time commitment for implementation; the perpetual content creation obligation; the inevitable compliance concerns. Add to that some skepticism about the efficacy of social media as a marketing tool and you have a recipe for equivocation or procrastination.
So let’s look at the case for jumping into the social media fray.
Is anyone out there listening?
A recent study conducted by Cogent Research for LinkedIn found that 90% of the ‘mass affluent’ – investors with $100k – $1m in investible assets – are active social media users. About a third of them use social media to engage with financial institutions, conduct research and seek advice. This trend is bound to grow as the Gen X and Millennial markets gather investable assets and look for the best ways to put them to work. In fact, many nascent investors in the younger demographic prefer to do their research and advisor ‘shopping’ online, deliberately avoiding more traditional channels. These prospects represent the future for financial advisors – to ignore their behaviors and preferences is simply not in a financial advisor’s best interests.
Why is social media so powerful?
A prospect or newly minted client may meet with you for up to a year before they can truly appreciate the depth of your knowledge and the value of your advice. What if you could replicate that client experience with prospects without a year full of lunch meetings? That’s what social media is so good at: scalability and amplification. A few people read your emails and blog posts, tweets and LinkedIn group comments to begin with, growing to a sizable audience over time. Initial engagements turn into multiple impressions, building exposure and your reputation at the same time. It’s a very simple, very powerful premise. As Ed Gilligan, president of American Express Company, said recently about their Small Business Saturday event promoted through Facebook, “It was like throwing a pebble in the ocean and seeing the ripple effect.”
Purposeful content, posts, and comments
Whether it’s a blog post, market commentary or LinkedIn group comment, social media is all about writing regularly. As you find your online voice, keep this in mind: no one likes a bore, whether it’s at a dinner party or in an online forum. Write like you’re talking to an interested guest, write articulately about what you know. Avoid a push mentality in all content – this is about reputation building, not sales chatter. Start by targeting a particular market niche at first, and write about specific concerns. “When Will Europe Recover?” is a big story that is best left to mass media, while a blog post titles that start with “5 Tax-Sensitive Must-Dos…” or “Why Group Medical Practices Should…” are niche stories that may be of particular interest to your audience. Keep it short and to the point – it will keep you focused and maintain your reader’s attention. Advisors who do this well become subject matter experts in the minds of their followers and readers.
Get smart about the technology
Jump into the shallow end of the pool and go from there. As Eileen Loustau, global director of social media at Blackrock/iShares, says, “There is no such thing as social media strategy. It’s more like social media test and learn.” It’s not rocket science, but getting familiar with the tools and techniques takes a time investment. Start with LinkedIn and join a few groups, get to know the active participants, and start participating yourself. Familiarize yourself with common blog techniques such as tagging content and link building. Start a Twitter account, follow other advisors and relevant publications and see what catches your attention and how subjects and sources get tagged – you’ll learn a lot by simply observing from the sidelines. As you grow more confident you can participate a bit more week to week. Use each digital channel appropriately: Twitter for trending subject matter, LinkedIn groups for peer-to-peer discussions, and a blog for longer-form commentary. Targeting a monthly participation goal will keep you honest.
Regulatory compliance and social media
This is probably the biggest stumbling block for advisors and remains an area that is poorly defined by regulators. While Morningstar remains cautious in their advice, going as far as to say, “We do not believe that the current regulatory structure is clear enough that widespread use of social media is worth the risk, no matter how valuable it can be,” that hasn’t prevented many financial services industry players from utilizing it. Investment News recently pointed out that “There are no significant cases against advisers who have used social media improperly and, in fact, the [SEC] commission continues to offer practical guidance.” The best advice here is to remain as cautious as you are when you write an email to a client. Avoid promissory or predictive claims, use the usual qualifiers such as ‘may’, ‘could’, ‘in my opinion’, ‘I believe’ in statements. If you work in the business you likely already know the rules. There are a growing number of affordable automated archiving solutions out there as well, included product from Arkovi, Hootsuite, and Erado.
What’s next
Social media is a living ecosystem that continues to grow in many directions. More sophisticated advisors use it to promote events, sign up subscribers for email newsletters, and offer invitations to attend webinars. The thing they all have in common is that they started like you, from zero. If you choose to participate, you’ll find that you’re learning quickly simply by following the practices of the seasoned pros, many of whom may have only a six month head start on you!
