Not only are more advisors using social media for business purposes, but more are making it a priority. According to a Socialware survey of nearly 150 FAs on their use of social networking sites, 40 percent of advisors said they’re making social media a top five priority, versus less than 25 percent in 2010. An additional 5 percent of advisors said it was actually the top priority for their business.
“I have a feeling the flood gates are going to open,” said Victor Gaxiola, social media strategist with Red 7 Marketing, who expects these numbers to continue to grow.
Social media is becoming more of a priority for advisors because of the growth in adoption within FAs’ prime target audience, Gaxiola added. Also, the recent IPO of LinkedIn and potential IPOs of Facebook and Twitter seem to confirm that social media is not a fad.
Christie Campbell, director of marketing at Socialware, said the results resonate with the interest usage the company has seen in the marketplace from individual advisors as well as broker/dealers. According to the survey, more than 84 percent of FAs are using social media for business purposes, up from 60 percent a year ago. Another 10 percent indicated that they plan to use social media in the future. LinkedIn was the prominent social media platform advisors are using, with Facebook second and Twitter third. About 20 percent of FAs said they planned to use Google Plus, a new platform, while 5 percent are already using it.
“[Social media is] a great place to go to build new relationships but also to cultivate existing relationships,” Campbell said.
Campbell said more broker/dealers are talking about social media now, with many announcing programs in the marketplace. Advisors are demanding it, and firms can also use it as a recruiting mechanism, she said. In the survey, 80 percent of those surveyed said their firm had a social media policy, compared to 57 percent in 2010.
A lot of firms are realizing that if they don’t have a social media policy, they will potentially be in trouble with the regulators, said Michael Byrnes Jr., president of Boston-based Byrnes Consulting. In early 2010, FINRA issued social media guidance that said all b/d member firms should have a system in place for tracking and archiving social media communications. The agency still requires that firms pre-approve content that is static in nature. And just recently, FINRA issued Regulatory Notice 11-39, which further clarifies FINRA’s rules on social media and more clearly defines “static” versus “interactive” content.
With technology provided by such companies as Socialware, Erado and Actiance, b/ds are able to monitor, track and archive reps’ social media activity, in compliance with FINRA’s social media rules. And FINRA’s notices have spurred awareness among firms, Campbell said.
Earlier this month, seven broker/dealers signed on with software provider Erado to use social media in an interactive way. A number of independent b/ds, such as Raymond James Financial, Commonwealth Financial and Cambridge Investment Research, as well as National Planning Holdings, Advisor Group and Securities America, are already allowing interactive social media usage, while many other b/ds allow their advisors to post static content, such as profile pages, with pre-approval by the firm’s compliance department. Morgan Stanley Smith Barney is also allowing reps to use Twitter and LinkedIn for pre-approved messages.
Most advisors are just starting to get their feet wet, so to speak, with social media, but some are already having success with referrals and prospects. More than 30 percent of survey respondents said they have been able to cultivate referrals through social media, while 35 percent said they’ve generated new prospects.
“Social media can be word of mouth on steroids,” Byrnes said. As opposed to forcing a message on someone, social media allows FAs to participate in a discussion. The marketing message can be woven into that discussion, but most FAs aren’t even pushing a message out, Byrnes said.
If someone follows you, friends you, or tries to connect, this opens them up to receive messages from you, said Gaxiola. And the viral nature of that information or content is seen beyond the first tier, or the people you already know. We all have a Rolodex, Gaxiola said, but having access to the Rolodex of people on our Rolodex can be very powerful.
It’s also not as obtrusive as a cold call or direct mail because there’s a shared connection, Gaxiola said. “It allows us to present, engage and encourage conversation and dialogue.”
While firms want to meet the needs of their advisors, they also should address the need to be online as end clients have come to expect that, Gaxiola said.
“The real question is, ‘how does it benefit clients as well?’” Gaxiola said. “This should be a client-driven industry.
“The next generation of investors is going to expect their advisors to communicate online.”Value in Social Media