When advisor Elle Kaplan first started tweeting, she wasn’t trying to build business but to make Wall Street more relatable, especially to women.
“I wanted to provide a voice for non-Wall Streeters and people who feel disenfranchised from Wall Street—anyone who is other,” says the 36-year-old Kaplan, CEO and founding partner of Lexion Capital Management in New York City. “My objective was to lift the veil, to demystify Wall Street.”
In less than one year, Kaplan’s “online tribe,” as she calls it, has surged from 10 to more than 2,400 Twitter followers. Not coincidentally, a dozen of them have signed on as clients.
“It’s inspired me to expand faster. There is so much unmet demand,” says Kaplan, whose fee-only firm manages $90 million in assets. “I wish I had embraced it sooner.”
The use of social media in the advisory community is gaining traction—that much is undeniable. There are a lot of Elle Kaplans out there. But how effective is it, really? As Kevin Dinino, president of San Diego-based KCD Public Relations, frames it: “Is the juice really worth the squeeze?”
An Aite Group research study late last year concluded that advisors were seeing limited or diminished returns from their use of social media—in part because they failed to use it correctly. As Investment News quipped in its headline about the study: “It’s more like social notworking.”
Aite Group senior analyst Ron Shevlin, co-author of the report, believes there’s too much hype around social media and too little attention to return on investment. In fact, Aite is so put off by the hype that the firm has no plan to revisit the topic in depth any time soon.
“There’s this huge, huge gap between awareness and effective utilization,” Shevlin says. “Is it driving bottom line results? Definitely not. It’s nowhere near being a reliable, dependable channel for marketing from an advisor perspective and I’ll go to the mat arguing that.”
Even advocates agree that social media adoption by advisors is still in its early stages. But there are signs that it is beginning to become more mainstream.
LPL Financial, for example, recently produced a white paper about leveraging social media that it is using as a recruiting tool. More than one-third of the firm’s 12,000 advisors have registered with Erado, LPL’s social media archiving service. Notably, LPL is reaching out beyond the advisory world’s favored social media sites—Facebook, LinkedIn, Twitter and YouTube—and is studying the suitability of both Google+ and Pinterest. And, by the end of this year, LPL advisors will be able to tap into the firm’s various marketing platforms from their mobile devices.
“Social media is not a standalone, not a silver bullet,” notes Marissa Fox-Foley, executive vice president of marketing for LPL. “But we are certainly seeing the power of it as a communication and amplification platform. I’m hearing from the wirehouses and other financial advisors that they are following news more on Twitter than on Bloomberg. That’s where people are going today for true information updates. That’s fantastic.”
One of the challenges of social media is that there is no metric yet to measure hard dollars when it comes to return on investment—or, as Dinino labels it, “juice.”
“This is one of the biggest points of discussion right now. A lot of social media leaders are going to senior management to get a budget for this, but you can’t get a budget unless you can convincingly say there’s a positive effect,” observes Jesse Mark, a research analyst with the consulting firm kasina. A new report authored by Mark shows that a solid majority of asset managers and insurers, 87%, are now using social media—in large measure because advisors and investors are demanding it.
In the absence of a metric to track results, Mark suggests that product manufacturers and individual advisors ask themselves this key question: What do you stand to lose by not being on social media?
“What is your loss on the lack of investment? How many referrals are you losing out on? How many potential customers are you losing because you are not engaging with them on social media? What about damage control?” adds Mark. “What happens if someone is badmouthing the brand and you’re not there to hear it?”
Dinino says there is still a lack of understanding on the part of many advisors when it comes to the sheer power of social media as it relates to defining and deepening the advisor-client relationship.
“It’s an extension of your brand and an avenue to connect with clients and prospects at levels that were impossible before. For example, say you host a charitable event and post pictures of it on your Facebook page. This paints a picture of your firm, of you, and your expertise. This is something that can’t be communicated by a company brochure,” he adds. “It humanizes the relationship.”
And while there are no hard metrics to measure a return on the dollar, Dinino says there’s lots to be said for learning how many new people clicked on your Facebook page or LinkedIn profile, the search terms they typed to find you and the online venues they are using to visit your website. “That’s marketing gold,” according to Dinino.
Brian Lauzon, managing principal of AdvisorAssist, a consulting firm in Pembroke, Mass., is particularly high on corporate blogs and Twitter for his investment advisor clients. In fact, he supports posting online blogs with links back to Twitter as a replacement for monthly or quarterly newsletters and snail mailings. In other words, save the Freedom stamp.
“We’re living in a real time world. It’s going to be a long-term process for advisors but over time, everyone will be doing this—particularly as the average age of your client base get younger,” says Lauzon.
Moreover, he adds, prospects will increasingly vet their advisors by researching them online first. “If they don’t see anything, they may wonder why not. That may not be a neutral but a negative,” Lauzon notes. “For the foreseeable future, this is part of marketing and a growing part. Turn the clock forward, I suppose anything can happen.”
When advisor Neal Frankle started his personal finance blog in 2009, it was to build up an audience for a book he was writing. The blog, WealthPilgrim.com, took off and Frankle abandoned the book project. Today, the blog is a standalone business that generates advertising revenue and receives over 100,000 visits a month.
Frankle, 55, heads Wealth Resources Group, an RIA with $80 million in assets under management in Agoura Hills, Calif. The blog has resulted in two clients—one of them, his biggest.
“Personal finance is something people are really hungry to read about,” says Frankle, who posts commentary four times a week. On top of that, most personal finance bloggers aren’t financial professionals, which Frankle believes gives him an edge.
His twin goals with WealthPilgrim are to educate and generate revenue. His hope: that within three years the blog will rival his financial planning practice. “What I do is what I love, which is the writing,” he says. “I have so much fun with it. I would do it for no money.” —E.U.
In just 20 months, Jude Boudreaux has built a fee-based wealth management firm from scratch—and he says he couldn’t have done it without the help of social media.
“I knew when I started it was going to be a large part of how I was going to market myself going forward,” says Boudreaux, 34, founder of New Orleans-based Upperline Financial Planning. “Ultimately, we’re selling ideas. There’s space for people to have a voice and say something different, and social media is a great outlet for that.”
An advisor for five years, Boudreaux has used Twitter to build up the “soft connections” in his network. Recent tweets include his takeaway on a new PBS series, a riff on penguins and a retweet of a link to an article on refinancing.
“I’m trying to meet new people who have the same interests I do that I like. It’s a rapport builder,” says Boudreaux, who has over 2,000 followers on Twitter. “Typically, people want to get to know you and like you before doing business with them. Hopefully, I’ll be the person they think about when they have a question about planning. It’s no different than going to a networking function. It’s the same thing—it’s just a matter of where I am when I do it.”
At the moment, Boudreaux has 30 clients. At least four first connected with him on Twitter. —E.U.
Barry Glassman, 42, doesn’t regard Twitter so much as a broadcasting platform—but as a listening post.
“Many people are confused about Twitter because they believe: ‘Why should I do it? I don’t want to be the next Ashton Kutcher or Usher.’ In my opinion, 80% of Twitter is listening and following,” says Glassman, whose McLean, Va.-based firm, Glassman Wealth Services, has $525 million in assets under management. “And no compliance department in the world is going to find any reason to complain about listening.”
Instead of reading the Wall Street Journal, Glassman follows reporters on Twitter as they’re breaking stories and seeking news sources. Glassman, an advisor since 1994, has built several relationships with reporters as a result of his presence on Twitter. He also follows industry leaders like Michael Kitces and other people he respects like Bill Gates. And he’s taken it to the next step, following some of the people that Bill Gates follows.
“Most people don’t enter this realm because they think they need to tweet a lot. They don’t,” says Glassman. “This is personalized content by others I respect. That’s big. If you keep it from being a distraction, you can use it to your advantage. I know it’s making me smarter, more knowledgeable and, I think, more effective and efficient for the families we serve.” —E.U.