More On Legal & Compliancefrom The Advisor's Professional Library
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
Sending a LinkedIn invitation and getting a $70 million account was all in a day’s work for one Morgan Stanley financial advisor—not all in the same day, mind you, but in the sense of day-in day-out use of social media that the firm actively encourages.
“It was an advisor in our New York City area who serves the small business owner segment,” says Lauren Boyman, head of digital strategy for Morgan Stanley Wealth Management.
Boyman told ThinkAdvisor in an interview on Monday that this advisor “is very systematic about how he uses LinkedIn,” participating in group discussions targeted to CFOs or CEOs of small businesses.
Through disciplined activity in this market—Boyman says there are nearly 2 million small business owners using LinkedIn—the advisor “gets himself known as a knowledge leader within the small business space…After he has a roster of people he knows and has established a name for himself, he invites them for more personal interaction.”
While the large account, from a technology consulting and services company, may be an outlier in terms of size, Boyman (left) says Morgan Stanley advisors enrolled in the firm’s social media program are seeing positive results.
“For those advisors who are using social and doing so on a daily basis—meaning it’s actually part of their practice, something they have absorbed—40% have gotten a new client,” she says, adding that a failure to be consistent will yield no better results than trying to diet by going to the gym once a month.
“It has to be part of their business development and marketing efforts on a regular basis,” she says.
(Wirehouse advisors aren’t the only advisors who are increasingly using social media for business building. See these recent ThinkAdvisor articles:
Where to Find Wealthy Clients on Social Media
RIAs’ Top Compliance Goal: Social Media Policies
4 Tools for Fund Managers, and All Advisors, to Use Social Media Effectively)
Boyman says some 4,000 Morgan Stanley advisors—about 25% of the advisor force—are enrolled in the firm’s social media program, which fully rolled out a little over a year ago, after a yearlong pilot program.
She says about 75% of these advisors have only a LinkedIn account and about 25% both a LinkedIn and Twitter account. The firm is currently working on a pilot program for Facebook, which Boyman calls “tricky,” citing worries over a crossover between personal and professional usage.
Morgan Stanley provides its advisors with compliance-friendly, pre-approved content, so that advisors needn’t spend lots of time finding relevant material, and it archives all communications and tracks audience engagement—for example seeing what information audiences are sharing and surveying advisors to see what kind of business they’re bringing in.
In a new initiative, the firm just added a whole slew of new content that goes beyond the market and investment strategy focused material they were using exclusively until a week or two ago.
The new content, provided by American Express Publishing, includes material on golf, travel and leisure, food and wine. While it’s too early to make meaningful comparisons as to which content area is most effective, Boyman says that so far at least the lifestyle-oriented content—on subjects such as the five new wine regions with lots of potential or state-of-the-art golf equipment—is being shared as much as their most popular finance-oriented articles.
While there are a wide variety of business development activities an advisor could take, Boyman says the firm especially esteems social media because of the ease of tracking and wide potential reach.
“Other kinds of marketing activities are harder to measure and intangible,” Boyman says. “Something like a seminar or event is more tangible to measure but harder to put together and organize. Coaching little league or [participation in] charitable activities—that’s harder to measure.”
In contrast, social media, she says, is not only easier to measure, but is an especially efficient and productive use of an advisor’s time, she says.
“With other ways you reach one or two people or pay a lot of money and not get anywhere. Social allows you to reach thousands of people with one click.”
Still, many advisors have been slow to adopt, something the Morgan Stanley exec says is inherent in a large group. The firm’s website program, for example, has been around for 15 years now, but is still short of 100% participation, despite the ubiquity of websites in the U.S.
“To get 16,000 to 18,000 advisors to do anything is not easy. There are a few approvals they have to get. They have to get training and have profiles approved,” she says.
But Boyman is confident that advisors will embrace social media.
“We’re growing steadily and have been for a while. At some point it’ll reach a steady state plateau—by focusing on engagement and giving them different kinds of content.”
Coming up next? The firm is working out how to allow assistants to help out with the advisor’s social presence.
Presently, “others can do advance searches or look for groups that are relevant,” Boyman says. “But we’re working on a technological solution to allow someone in more of a support role to help out [actively by overcoming] IT and security concerns” involving passwords and the like. Boyman expects a solution later this year.
Check out these related ThinkAdvisor articles:
- Where to Find Wealthy Clients on Social Media
- RIAs’ Top Compliance Goal: Social Media Policies
- 4 Tools for Fund Managers, and All Advisors, to Use Social Media Effectively
- Advisors ‘Haven’t Fully Committed’ to Social Media, SEI Expert Says
- Go Social, Stay Compliant: 3 Tips for Advisors
- Raymond James Gives Advisors Access to New Social Media Platform