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Social Media Catching Up To Face-to-Face Prospecting

The personal touch is still the most effective way for wealth managers to grow their business, but the use of social media is gaining fast, according to a new study by Advisors Trusted Advisor, a Medfield, Mass.-based practice management consulting firm.

The personal touch is still the most effective way for wealth managers to grow their business, but the use of social media is gaining fast, according to a new study by Advisors Trusted Advisor, a Medfield, Mass.-based practice management consulting firm.

Referrals by existing clients remains the most successful way to gain new clients, and hosting events that allow for face-to-face networking is the most popular marketing tactic, according to ATA’s survey of 262 financial advisors last November and December. But advisors are increasingly turning to social media as well. The use of LinkedIn nearly doubled, for example, from 21 percent in 2009 to 40 percent last year, the survey found, and the percentage of firms who allow advisors to use social media also nearly doubled, from 35 percent in 2009 to 67 percent last year.

“You cannot beat personal contact,” said Mike Slemmer, ATA principal and author of the study, “Winning New Business, Growing Your Firm. “Financial affairs are extremely personal and sensitive, and, like a doctor, a trusted advisor should be part of the fabric of a client’s life. That being said, the worm is definitely turning when it comes to social media. Usage is increasing, and we’re seeing more firms take advantage of LinkedIn and new media options like online power point presentations using SlideShare and videos on YouTube.”

Wealth managers interviewed for this story agreed that traditional marketing that maximizes personal contact remains paramount, but that social media has become a force they can’t ignore.

“The notion of what a relationship is is changing quickly, and social media is the tip of the iceberg” said Douglas Wolford, president of Rockville, Md.-based Convergent Wealth Advisors. “People on LinkedIn, for example, feel a relationship with people they never really met, and it turns out to be an engine for making connections. And while LinkedIn and other social media may not be a sufficient condition for establishing a relationship with an advisor, I do think it will become a necessary one. People are checking us out more, and a recommendation from a golf buddy isn’t enough anymore.”

Search Engine Marketing

In addition to launching a Convergent blog, the firm is also stepping up search engine marketing efforts, Wolford said. For example, Convergent is buying sponsored links on Google, buying such key words as “financial advisor California.”

Newton, Mass.-based Braver Wealth Management is also paying more attention to social media, said David D’Amico, president of the firm. D’Amico said he has begun tweeting on a daily basis and views LinkedIn as a valuable intermediary for contacts, clients and prospects.

“We feel compelled to embrace social media, not so much for a marketing solution now, but to be able to accommodate a younger generation who will be our next clients,” he explained.

Nonetheless, D’Amico and other wealth managers stressed the continuing importance of working closely with existing clients and finding ways to personally meet new prospects, especially at events. As Marla Bace, a partner and chief marketing officer for Brinton Eaton Wealth Advisors in Madison, N.J. put it; “Personal contact, word of mouth and client referrals are not only the easiest ways to grow your business, they are among the most cost-effective ways to convert a prospect to a client.”

Events: Office, Hotel or Resort?

In an age of information overload, it’s critical that events by wealth management firms address specific concerns of clients and prospects and leave the audience feeling more educated and more enlightened, Bace said. Brinton Eaton, for example, will present talks on ETFs and fixed income in coming months in its Madison office. In fact, Bace said she highly recommended holding events in a wealth management firms’ office, if possible, because it is a powerful way for the firm to “reinforce the brand.”

But D’Amico said he favored holding events in hotels, instead of the office, citing better catering and more comfort. What’s more, he said, “Hotels are neutral territory and a less intimidating venue.” Braver is planning to do five educational seminars this year, he added, covering topics including retirement, mortgage and tax planning.

In addition to scheduling a series of presentations by Convergent’s chief investment officer in Los Angeles, New York and Washington this year, the firm also puts on “high tone” events for select clients, Wolford said.

In fact, next weekend, Convergent is picking up the tab for about a dozen ultra wealthy clients and prospects for a weekend at the Montage resort in Deer Valley, Utah. “It will be mostly socializing,” Wolford said. “There will be very little business discussed, if any.”

But events shouldn’t occur in a vacuum, Slemmer warned.

“Events work when firms take a brand-based approach, but they shouldn’t be dependent on events,” Slemmer explained. “Firm and brand awareness happens over time. Response to events is the outgrowth of having built up the firms’ awareness through a wide range of activities over a sustained period of time.”

Wolford, whose extensive marketing background includes stints at General Electric as a marketing executive and as an adjunct marketing professor at the Carey School of Business a Johns Hopkins University in Baltimore agreed. “In marketing, multiple appeals tend to produce a result where the whole is greater than the sum of the parts,” he said.

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