From the March 2010 issue of Boomer Market Advisor • Subscribe!

Get social in your retirement planning

Social networking--interacting with others in an online community--has and will continue to have a significant impact on our society as a whole. The financial services sector is no exception. While the majority traditional financial services providers continue to take a wait-and-see approach to social networking as they wrestle with compliance concerns and unknown ROI probabilities, there are some firms that have aligned themselves with these trends.

Northwestern Mutual, in particular, has established guidelines and provided standard, compliance-approved language to their advisors for use on social networking sites such as Linkedin and Facebook. These firms not only ensure their financial advisors are in compliance, but have created a corporate presence on these sites, as well. Some even post videos on YouTube that feature an interview with their CEO or present information about internships with their firms.

Several new and recent financial services entrants have launched branded communities that are transforming the way in which people think of and approach investing. Guided investing sites like allow members to follow the real trades of "living room" investors and invest alongside them in their own brokerage accounts or an account managed by the site's fund managers; the self-directed investor is then compensated for sharing his/her portfolio, earning more as the number of followers grows. While one cannot transact in a portfolio on, it does allow investors to construct portfolios that, in turn, are tracked and rated against other portfolios. A creative portfolio that garnered one of the higher performance ratings was the "Miley Cyrus Stock Index" which includes a number of companies that are involved in the manufacture or distribution of products associated with singer/actress Miley Cyrus. While they may not be household names, some of these newer companies are at the forefront of the social networking trend, providing current and next generation of investors.

Consider the following, as your firm positions itself to participate in social networking:

  • Could It Help Me Attract New Clients? Many of you serve particular areas of specialty (e.g., doctors, auto workers, parents saving for their children' college education, etc.). Some of the more popular social networking sites enable you to inexpensively advertise to the segment of their user base that is interested in your area of specialty, within a certain geographic area (i.e., by state), and within a certain age demographic. They then provide all of the tracking information through a dashboard so you can determine the success of your efforts.
  • Who Are My Clients' Children? Since the children of your clients are likely to be influential in any decisions concerning their assets and accounts with you, your contact and interaction with them is important. Perhaps connecting with them through a social networking site would be an easy and inexpensive way to provide updates and stay top of mind with them.

FINRA recently released its "Guidance on Blogs and Social Networking Web Sites"--which clarifies the responsibilities of firms to supervise the use of social networking sites to ensure that recommendations are suitable and their customers are not misled. They are also holding a webinar on March 17 called "Implementing Compliance Practices for Social Media," which I would encourage you to attend.

Marc Butler is managing director with iNautix (USA) LLC, an affiliate of Pershing LLC. He is a regular contributor to industry publications and conferences. Marc can be reached at

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