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Financial Advisers Are on Board with Social Media, but Questions Still Linger

The findings of the Putnam Investments 2015 Social Advisor Study, which surveyed more than 800 U.S. financial advisers, point to the fact that social media continues to become an increasingly essential tool for advisers to communicate with their clients and build their book of business. Here are some of the study results:

  • 81 percent of advisers currently use social media for business, up from 75 percent in 2014
  • 40 percent of advisers (vs. 25 percent in 2014) use four or more social networks for business
  • 69 percent of advisers report social media is a significant component of their overall marketing effort—up from 56 percent in 2014
  • 79 percent of advisers report acquiring new clients through social media (up from 66 percent in 2014) with average annual asset gain from such clients standing at $4.6 million

These numbers appear to provide tangible proof that social media has grown to be the most direct path for advisers to reach out and influence their key audiences. However, despite this success, some degree of skepticism among advisers continues to linger. Below, I’ve listed the three most recurring questions financial advisers pose to our firm about social media.

Does Social Media Really Matter?
When confronted with this question, we consistently reply that the answer is debatable. What works for a financial planning practice may not work for a wealth management firm. And, in some cases, social media may not be a choice at all. However, before rejecting it, there are some key factors to be considered:

  • Unlike meeting a prospect face-to-face, or attending a live marketing event, social media interaction does not require travel and the costs associated with it
  • It allows advisers to exhibit knowledge and expertise to an audience beyond her or his established database of contacts and leads
  • It empowers advisers to create a sizable virtual network to develop new business
  • It helps foster conversations about an adviser’s brand
  • It establishes a bridge between an adviser’s website and her or his target audience—a good social media page will drive traffic to the adviser website
  • It enables advisers to position themselves as an expert sources at a negligible cost

How and Where Do I Begin?
Traditionally, the answer to this question has to do with what the adviser is seeking to achieve. Before engaging in social media activities, we recommend that our clients familiarize themselves with what other advisers, journalists and bloggers are doing—for example, the type of topics they cover, the frequency of their posts, the volume and quality of response they receive. This preliminary exercise will enable them to gauge whether or not social media is an effort they “really” want to pursue.

The second step is getting acquainted with a couple of platforms like LinkedIn and Twitter. After joining them and establishing suitable profiles, the next action is to create engaging content—topics of compelling interest to the adviser’s core audiences—that includes tips, guidelines and actionable ideas. Then post such content on the adviser’s website and concurrently proceed to “push” it via established social media accounts. Ultimately, your social media engagement should seek to achieve two key strategic goals: 1) engage your audience prompting it to share your expertise and guidance; and 2) direct traffic to your website.

How Can I Handle Compliance?
Traditionally, compliance is advisers’ major deterrent to social media. Often, this is due mainly to their lack of understanding on how to meet social media compliance requirements. Prior to launching into social media interaction, it is crucial that an adviser attains a good understanding of FINRA’s rules governing communication and specifically how they regulate social media activities. FINRA’s guidance, articles, podcasts and videos on this topic abound and are easily found on the Internet. To shield themselves and their firms from legal consequence arising from bad social media interaction, advisers must establish a social media policy—that includes archiving procedures and guidelines—and if needed, seek appropriate legal counsel.

With social media, like with any other type of marketing communication effort, advisers must pay utmost attention that any post, comment, tweet is FINRA compliant. For example, a post or tweet in which an adviser may support a specific stock or bond could represents a “recommendation.” As such, it could be consequently treated as a breach of FINRA’s suitability rule and bear legal consequences for both the adviser and her firm.

Claudio PannunzioClaudio O. Pannunzio
President and Founder
i-Impact Group
Greenwich, Conn.


Editor’s Note: Other FPA social media-related content that may be of interest to you include:

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Diamonds and Your Social Presence are Forever

The internet was once regarded as an “other” space that existed beyond the reaches of “the real world.” What happened on the Internet wasn’t to be taken seriously–it wasn’t real. This rather strange concept of the Internet is now changing, due in large part to the rise of social media.

While some continue to miss the Tweet, there is a growing consensus that what is said or done online has a direct and measurable impact on the physical, tangible world.

And all of this mass communicating we’re doing, every think-piece, Tweet, status update, and picture we post, is being cataloged–it’s been said that history is now recorded faster than it’s actually taking place. The Internet is one large encyclopedia of the human experience, and unlike the hardcover collection on our shelves in the basement, it cannot be destroyed by flood nor fire.

Diamonds and your social presence are forever.

In other words, navigating an online presence is hard, and two social media sites in particular get people into the most trouble.

On Facebook, keeping your personal and professional self separated is a must. For many of us, even before we considered our future careers, Facebook was around to make sure we wouldn’t have one. Depending on how long you’ve been active on the site, Facebook tends to be a place of old college buddies, new babies of those old college buddies, and beer. Probably of you consuming it. With your old college buddies.

Instead of mixing business and pleasure on your profile, create a business page for your firm. This way you can guarantee that what you post is professional and in keeping with your business brand. Most of your clients aren’t interested in seeing you in your college glory days. In that same vein, restrict access to your profile to only include friends–they’re less likely to tattle on you if you make a blunder.

Twitter’s an odd bird. If you’re a professional, it likes a mix of business speak; unrelated yet interesting articles from around the web; and the odd pithy personal update. Unless you have something akin to an obsession with declaring the veracity of unicorns, it’s not imperative to maintain a personal Twitter account as well as a professional one. If you do have said passion, create a cleverly disguised pseudonym and Tweet to your heart’s content–just remember which account you’re logged into.

While the readership of Twitter is generally accepting of a variety of posts, the deceptively open and on-the-fly nature of it makes it prime real estate for gaffs. You may be Tweeting from the comfort of your own home, but your Tweet is out roaming the world. And once it’s out, it’s almost impossible to stuff that bird back in the cage.

The big takeaway?
While it’s true there’s a potential landmine waiting to explode with every social media post, it’s also true that how we conduct ourselves online shouldn’t be any different than how we conduct ourselves in person. Unless what you have to say qualifies for the Whistleblower Protection Act, if you wouldn’t say it out loud, don’t say it online.

Absolutely speak to your audience, but also give thought to the possible reaction outside of it. And before you wade into whichever moral issue is up for debate, do a quick cost-benefit analysis to determine whether your opinion is worth the potential loss.

Oh, and don’t forget to have fun!

Kellie GibsonKellie Gibson
Marketing Writer
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