Social-networking experts say that Morgan Stanley Smith Barney (MS) made the right move last week by announcing that it would let 600 advisors access LinkedIn and partially access Twitter in late June. They expect more moves on behalf of Morgan Stanley and the other wirehouse firms over the next year or so, but also caution the firms and their FAs to not abandon their conservative approach to the new media.
“It’s really a double challenge,” said Stacey Haefele (left), CEO of HNW, a New York-based financial-services marketing firm, in an interview with AdvisorOne. “How do you enable advisors to what do their best with high-net-worth clients and prospects? And [how do you work with] media that are dangerous, that can act as accelerants or amplifiers for messages?”
For Haefele, “It’s best to have the guardrails in place. Thus, Morgan Stanley and others are saying, ‘Let’s get going with some controls at first and then we can get looser or tighter depending on demand and users’ preferences.” Also, she adds, “It’s best for broker-dealers and other industry players to be part of the action now and have a precedent in place before there’s more regulation.”
Other experts agree. “FINRA approved some use of social media two years ago, and we see more guidance coming in about 12 months,” said Scott Brown, associate director of MarketCounsel, an Englewood, N.J.-based firm that supports wirehouse advisors’ transition to independence.
The wirehouses are expected to develop more social-media policies once this guidance develops, Brown says. “Meanwhile, they are trying to move forward and do their best to work within existing rules. This [Morgan Stanley move] is a big step,” he said in an interview. “We will see how the others follow suit. It’s a hot issue.”
Avoiding ‘An Ashton’
While social media and their growing use online are exciting in many ways, they've got their down sides. Thus, experts say, advisors shouldn’t take leave of their senses when using it.
When it comes to what advisors should tweet or blog about, “Stick to what you do best and keep it close to what you do,” said Haefele. “It’s tempting to go ‘Ashton Kutcher’ on this and share what you’re having for lunch. But there’s no meaning to this. Focus on what the people you are in contact with care about … or your clients will tune or filter you out.”
In terms of what advisors do online, “It you wouldn’t do it in real life, then don’t do it on the Web,” she explained. For instance, don’t join someone’s LinkedIn network if he or she doesn’t return your phone calls. “This has to do with what and who you are,” Haefele said. And you want to root yourself in your expertise.”
For both the wirehouses and their advisors, the brand needs to come first. “Think of your own brand and style,” she explained. “Just because you have a channel to broadcast something doesn’t mean you need to find something meaningful to say.” And be sure that you are helping clients filter the social-media noise, rather than just adding to it, Haefele notes.
Watching the Wirehouses
The big brands are being watched carefully today, she explains. And while their social-networking efforts should be rewarded over the long term, they do come with risk.
“Everyone is watching these brands and waiting for them to make a mistake,” said Haefele. “But I have to applaud Morgan Stanley and the other firms for trying to figure out [how to use social networking] for these distributed sales forces in order to transform how prospects find advisors online and how they communicate with their constituencies. Good things can come from this.”
And despite the risks, experts anticipate that the major broker-dealers will experiment more soon. “LinkedIn is the business world’s social network, and they are testing the waters there and on Twitter,” Brown said. “Next will be Facebook.”
This is a critical issue for wirehouses to get right, and at the moment all eyes are on the trailblazer, Morgan Stanley, says executive-search consultant Mark Elzweig (left). “My view is that the wirehouses don't have to be as cutting edge in this area as the independent channel, they just have to be ‘good enough’ to satisfy their advisors,” he said in an interview.
While independents and RIA's will likely always have a leg up in this area, according to New York-based Elzweig, “Never underestimate the creativity of wirehouse executives. No matter what the challenge, they always figure it out. Years ago, many people said the product-pushing wirehouses wouldn't be able to compete with independents who offered open architecture, and they have all been proven wrong.”