From the October 2013 issue of Investment Advisor • Subscribe!

September 30, 2013

Web Expert Unveils Social Media’s Untapped Client Riches

At the ripe old age of 31, Clara Shih is on a mission to help advisors embrace the social media wave

Clara Shih is on a mission to help advisors pull in new clients, build stronger relationships with their current ones and bolster their brands via “social selling” on Facebook, LinkedIn and Twitter.

A graduate of Stanford University—who also holds a master’s in Internet studies from Oxford University—Shih joined Google and later Salesforce.com, helping create the first generation of Web applications. In 2007, Shih developed the first social business application, Faceforce. Her book, “The Facebook Era: Tapping Online Social Networks to Market, Sell and Innovate,” has been featured in The New York Times and is now used as a marketing textbook at Harvard Business School.

In 2009, she and a college buddy, Steve Garrity, founded Hearsay Social, a social media platform designed to help financial services firms embrace what Shih calls “social selling.”

Shih achieved all of these accomplishments, mind you, by the ripe old age of 31.

“The way that today’s customer—retail and institutional—makes buying decisions is increasingly influenced by online and social media sources,” Shih, Hearsay Social’s CEO, told Investment Advisor in an interview. Clients’ “buying decisions have fundamentally shifted; the way that an advisor ‘sells’” must shift as well. Hearsay’s “role is to help advisors hone the right ‘trigger events’” that their clients tell them about via Facebook, Twitter or LinkedIn, such as the birth of a child, marriage or pending retirement—all “life events that push people to get financial help” with issues like college planning and wealth transfer, Shih said.

“Clients are sharing these life events, or buying signals, on social media,” Shih continued, which creates the perfect “opportunity for advisors to personalize their message based on what’s happening in people’s lives.” Emails, she said, have become an “impersonal” way to reach clients, and “most emails don’t get opened.”

Shih and Hardeep Walia, CEO of Motif Investing, recently co-wrote in their blog for ThinkAdvisor.com that a survey by Cogent Research of 4,000 investors with more than $100,000 in investable assets found that 34% of the investors used social media to search for financial advice. “More to the point, the survey found that 70% of respondents started using a new advisor, or switched from an existing one, based on information from social media sites,” Shih and Walia wrote.

Of course, advisors’ regulatory and compliance concerns abound when it comes to social media, but Hearsay is there to help. As Shih and Walia wrote in their blog, while “there are big penalties” for firms and advisors that violate the rules governing issues like fiduciary duty, recommendations and record retention, “we have seen that many advisors are behaving too conservatively with social media—with some eschewing it altogether—because of vague and sometimes baseless fears about regulatory action. But that doesn’t mean you should avoid social media entirely. If you do, your current and potential new clients may find someone else with more social media savvy to work with instead.”

Hearsay’s success is also apparent in the new round of funding the company just received as well as the bevy of new financial services firms that have recently signed up as clients.

The San Francisco-based social media firm recently announced that it has raised an additional $30 million in Series C funding led by existing investors, Sequoia Capital and NEA, bringing its total funding to $51 million.

New companies have also signed on in the past six months as clients, with the most recent being Raymond James and LIMRA. Raymond James, which partnered with Hearsay in July, is now offering Hearsay’s platform to its 6,000 advisors, while LIMRA announced recently that Hearsay is its exclusive Elite Strategic Partner, becoming the endorsed social media solution for LIMRA member companies.

Companies that signed on to use Hearsay’s platform in the last six months are: Mutual of Omaha, Bank of the West, Nationwide Insurance, Allianz Global Investors, Wunderlich Securities, Modern Woodmen of America, SWBC, RPM Mortgage, Mortgage Master and two Canadian Chartered banks.

Gary Liu, recently hired as VP of marketing as part of Hearsay’s executive push, said the companies are now in “various stages” of rolling out Hearsay Social as part of their social sales programs.

What do advisors get from Hearsay’s platform? The Hearsay Social platform, as Liu explained, is “a SaaS application that advisors can access via any device to hear and respond to the most relevant things that their customers and prospects are ‘saying’ on top social networks, including Facebook, LinkedIn, Twitter and Google+.”

Key features, Liu said, include “Social Signals,” a feature that alerts advisors about important events in the lives of the people in their network, so they know the best time to reach out and have the context they need for more meaningful conversations. The content library is another feature, which allows advisors to easily share compliance-approved content and links across their social networks with just a few clicks, keeping them top of mind with customers and prospects while helping them credibly deepen those relationships.

Some notable comments from advisors on Hearsay’s website include one from Amanda Piper, a Raymond James financial advisor with Wagner-Lee in Columbia, Md., who says that while her firm is “fairly active with social media,” she has “really enjoyed the flexibility and ease of use of the Hearsay Social platform,” in which the firm uses “both the compliance-approved content as well as our own original posts.” Said Piper: “The simplicity of posting to all our social networks, monitoring the engagement, and having the ability to respond to it has been great.”

James Peregrino, a Farmers Insurance Championship Agent, said that 62% of his business the first year using Hearsay’s platform came from Facebook. “Anyone who wants to build a business on Facebook has to work with Hearsay Social.”

Shih said Hearsay has broken social selling into four steps. First is “be findable,” she said. “It’s not acceptable when a client searches for you and you’re not there” on Facebook, Twitter or LinkedIn.

Second is to grow your firm and network. Third is to “listen/hear what’s going on in your clients’ lives, [understand] their life events.” Fourth, establish credibility and build your brand. “We view our role as helping [firms] operationalize” that, Shih said.

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