From the July 2015 issue of Research Magazine • Subscribe!

How Advisors Should Explore the Social Media Universe

The digital parallel world opens a new frontier of financial marketing and communication

Illustration by Kotryna Zukauskaite Illustration by Kotryna Zukauskaite

Luddites loathe it; old-school types dismiss it. George Clooney scorns it with a passion. Nevertheless, the digital phenomenon called social media is here to stay. And for a growing number of financial advisors, this 21st century networking technology is proving to be a godsend.

Indeed, social media has become serious business for many financial services firms: Connecting online makes marketing and communicating with clients and prospects easier, faster, more efficient and far more effective than many traditional offline tacks.

One might imagine social media as an enormous digital cocktail party or, better yet, as a parallel universe—an exciting virtual cosmos existing side by side with the physical world.

“Social media really is like a parallel world—an added dimension of opportunity for firms of all sizes. However, you’re the same person in that world: You want to link up who you are in the flesh with who you are online,” says Marie Swift, president-CEO of Impact Communications, a marketing and PR firm, in Kansas City, Missouri, specializing in the financial services industry.

For the past few years, advisors with the four wirehouses and large regional firms have participated in social media to varying degrees. The BDs have been helped by companies like Hearsay Social that facilitate SEC and FINRA compliance requirements.

Raymond James has been a leader in social media, and both its employee advisors and independent FAs have been part of this dynamic activity for the last four years.

“Social media has a well-earned reputation as digital communications’ Wild West. But in our experience with advisors who have used it to communicate in a professional way with clients, prospects and centers of influence looking for thoughtful, insightful communication, we’ve had very little, if any, issues with stereotypical consequences,” says Mike White, chief marketing officer of Raymond James, based in St. Petersburg, Florida.

So, who are advisors meeting in this brave new online world? Happily, people who invest. Studies indeed show that two-thirds of U.S. consumers with investment accounts have profiles on Facebook, LinkedIn or Twitter, according to Amy McIllwain, vice president of social and digital strategy at Moore Communications Group, in Denver. Moore recently acquired McIllwain's consulting firm, Financial Social Media.

Among wirehouses, Morgan Stanley pioneered the use of LinkedIn, when in 2012 it permitted advisors firm-wide to join the service following a pilot program the previous summer. Now, about 7,700 of MS's approximately 17,000 FAs are on both LinkedIn and Twitter.

“We’ve had some significant success stories of advisors getting clients from LinkedIn. It's clearly a very powerful program, where you’re able to ask for a warm introduction,” says Valentina Chtchedrine, executive director of digital marketing strategy for Morgan Stanley Wealth Management, based in Purchase, New York. “We believe that social media is a very useful and effective tool for advisors to use in their marketing and practice management efforts.”

One Morgan Stanley social media coup occurred in 2012, when advisor Mitchell Rock landed a super-size $70 million account through LinkedIn. A senior vice president, he heads The Manhattan Group in New York City.

“LinkedIn establishes your presence to the world,” Rock told this reporter in a ThinkAdvisor story published on Sept. 3, 2013.

About 60% of Raymond James’ advisors are signed up for the BD's social media platform.

“We saw a really big increase in adoption in the last year,” White notes. A quarter of RJ's FAs are writing their own posts as opposed to disseminating pre-approved ones.

“[Self-authored] posts have a much higher engagement rate on average—130% to 150% compared to pre-approved posts, which tend to be 10% of that,” White says. All posts, however, must be approved by the firm.

Youth Culture

Many advisors enlist coaches and consultants to help them find their social media groove. In a twist, some FAs even hire young interns to teach them the social media ropes.

“At first, it's a big mind-shift. But once you get into social media, it becomes pretty easy,” Swift says.

On the personal side, social media can be a fun, free-wheeling kick; but business use requires a well-thought-out strategy.

“The important thing is to think: Where is your audience? Who are you trying to reach,” McIlwain says.

The point is to find a niche and direct all your efforts toward that specialty. For instance, if it's female prospects that you’d like to reach, you might want to use Twitter, Pinterest or Facebook—outlets that attract women. Facebook is also highly popular with baby boomers and retirees of any gender.

Swift encourages clients to decide what they’re seeking to accomplish on each outlet before starting to create and post content. Style, for one, must be appropriate. On LinkedIn, where advisors can network with targeted specialized groups, content should be “business professional at all times,” she says.

“Your Facebook business page should be business casual, stressing leadership and accompanied by photos. Twitter content should be a mix of formal business and a bit personal at times,” Swift adds.

She continues. “If you decide that LinkedIn is where you want to cultivate professional relationships, go big. That's where prospecting can get good. You follow the thread, try to build a relationship and ask for an introduction.”

Ideally, each social media site will lead visitors to other outlets on which you have a presence. Twitter, for instance, can guide folks to your Web page, blog, Facebook business page, Google Plus page and so on. All the while, prospects are learning more and more about who you are and what you have to offer as a financial advisor.

Alas, social media novices tend to make some big blunders when hopping aboard this fast-moving train.

“They’re thinking about social media as traditional media, which is ‘one way’; that is, they’re talking at people. For example, advisors are putting their brochures online,” says McIlwain. “But social media is a dialogue, where it's important to listen first and talk second. Be sure to show valuable content, but don't keep talking about ‘me, me, me!’”

Another misstep is advisors’ spreading themselves too thin—joining LinkedIn, Facebook, Twitter, Google Plus—but then discovering they don't have time to manage all those networks properly.

“So they turn into ghost towns,” McIllwain remarks.

Time Management

How much time should advisors carve out for business social media? Many experts and users agree that, on average, 30 minutes a day is all it takes to be effective. That half-hour may of course be split into morning and evening sessions or short bursts during the day.

Mike White maintains, however, that “there is no one-size-fits-all answer” to this question. “Some of our advisors have a discipline and plan out posts almost like an editorial calendar.” Others, with a looser strategy, devote less time.

At Morgan Stanley, “each advisor that uses social media several times a day makes their own decision on a daily basis. Between 15 and 30 minutes sounds right,” Chtchedrine says. “Some of our advisors on LinkedIn don't use it proactively very much—it's a tool for them to be found [by others]. But for an advisor who's looking to take advantage of the power of the networking part of the platform, 15 to 30 minutes [seems good]. We recommend that they actively go through their connections to find people of value that they’d like to meet and that they look up a prospect's profile before they meet with them to become [acquainted with] their background.”

Swift advocates “setting a schedule and sticking to it. If advisors find themselves surfing the Web, and one thing leads to another, and time is passing, and they’re not paying attention to what they need to get done, they’re in the danger zone.”

Ideally, the FA's approach to social media should be a mix of active and passive strategies.

“Social media is really good when it's an interactive give and take, not just a one-way promotional tool,” Swift says. “If it's only passive, it can begin to seem like a one-way bullhorn with purely outbound commercial messages. People will tune out over time.”

Further, there needs to be a mix of canned, curated and custom posts. Canned content is created by and available for purchase from third party companies such as Bill Good Marketing and MarketPro. Curated content consists of interesting articles that you’ve read and want to share. Custom content is original pieces you have written. In creating such posts, be sure to steer clear of compliance department verboten words like “return,” “rate,” “guarantee” and “expertise.” And never talk about or recommend specific products.

The idea is that “you’re educating—and then earning the right to that face-to-face meeting,” notes McIlwain.

Off the Phone

One of the most welcome aspects of social media: It is fast becoming a replacement for cold calling.

“Social media has become the primary tool for prospecting. It's a complementary tool for taking over cold calling because it's far more effective,” Chtchedrine says. “With cold calling, you have no idea who you’re calling. Advisors are far more likely to get that meeting [with a prospect] if they have a warm introduction or some sort of information about the person whom they contact. That's where social media is an incredibly useful tool.”

Client referral is another area where social media is a boon to both advisor and prospect. According to White, 90% of folks referred to an FA go straight to the Internet to check them out. Hence, social media-savvy FAs are managing to best advantage their brand as it appears online.

“Advisors can do that in an impactful way,” White says. “We’ve had great stories of advisors who have had better success with referrals because they’ve thought about how their brand comes across on Twitter, Facebook or LinkedIn before a prospect has even met them.”

Some FAs use social media solely as a passive device to, for example, check out their top clients’ Facebook pages for life events or family vacations—then they determine how they can provide good advice around these.

Another opportunity: To get more bang out of social media, advisors might look into paid and sponsored content. This option was introduced as a result of LinkedIn, Facebook and Twitter's need “to monetize in order to get a return on their shareholders’ investments,” McIlwain says.

Consequently, the outlets are cutting back on organic (free) exposure and asking users to pay to boost their posts, thereby gaining greater exposure. The cost is “super-inexpensive,” according to McIlwain.

She continues. “We’ve seen a huge shift from organic social media—posting and sharing content—to paid and sponsored content.

“This is a tremendous opportunity for advisors to target a highly niched market,” says McIllwain. For instance, one advisor recently ran a targeted ad campaign aimed at NCR workers after the company announced 20,000 employee-pension buyouts. The ad was embedded within the feed of that targeted audience.

In the grand scheme, social media's role is a robust extension of the advisor's traditional sales and marketing activities.

“Social media isn't a silver bullet. It's a function of what the advisor is otherwise doing and how they want to use it in their communication plan,” White says. “If clients and prospective clients are expecting to find their advisors in these [online] places, it's a mistake for firms not to figure out how to do that in a compliant way. We’ve invested a fair amount of time and money in our program. It's been well received.”

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