Communicating with clients and reaching new prospects is critical for maintaining and growing your business. In today’s marketplace, investors are increasingly selective; and financial professionals need effective methods to establish themselves as credible experts.

There are “new rules” for this rapidly changing environment to help you capture the power of instant online communication. By using blogs, forums, social networks and other social media, you can expand your reach, grow you business and establish yourself as a “thought leader.”

How social media helps grow your practice

If email and the web have benefited your business, then social media is the next generation. Online social media tools let you connect with your current network and make new contacts. Think of the networking you already do and imagine it happening faster, reaching farther, and with much greater transparency. That’s social media. There are several channels for social media. The most common include:

–Blogs. Similar to an online journal. Most blogs combine commentary on a specific topic, images, links to other websites–even links to other blogs. Several special search engines are used to search blog content, including Bloglines, BlogScope and Technorati. As of December 2008, Technorati was tracking more than 112 million blogs.

Forums. Also known as chat rooms, online forums are good for conversations and posting quick comments. Many forums are highly targeted to specific communities. Forums often include a moderator and require participants to register.

Social networks. These are online communities that link members based on mutual interests. Members often create a personalized profile, and connect with others via email, chat and special interest groups. With more than 35 million registered users, spanning 170 industries, LinkedIn has quickly become one of the most popular social networks for the business community. Other well known social networks include Facebook and MySpace.

Deepen relationships with clients

Social media lets you deliver a steady stream of targeted communications and educational materials to a broad group of clients while maintaining a level of intimacy and your unique personality. If you are strategic about subjects you choose and information you share across various social media channels, you can reinforce your expertise, maintain your voice and stay focused on your clients’ needs.

Another benefit of social media is immediacy. To illustrate, consider the experience of financial Advisor Scott Dauenhauer, a certified financial planner and principal of Meridian Wealth Management. He has been blogging for more than 5 years, but it was during the recent financial crisis that blogging became essential for him and his clients. While the market was in free-fall, many advisors were scrambling to calm clients and regain their trust. Dauenhauer used his blog to provide instant analysis on the day’s financial news and insight in a personal format.

If you do not have a blog, many easy-to-use tools are available for free or low cost, including blogger.com, typepad.com, and wordpress.com. If you already have a blog, stay active by posting original content or highlighting news from other sources. Build your list of subscribers by including a link to your blog in your email signature, your business card and other marketing materials. Also post comments on other blogs to reach more readers–and more potential clients.

Grow your prospect network

Social networks like LinkedIn can help you reach more prospects. Have you ever wanted to know the business owners and executives that are one or two degrees of separation from you? You can find out through LinkedIn simply by uploading your address book and connecting with people you already know. If you use Microsoft Outlook or a similar program, LinkedIn can sync with your address book and find your connections. To attract more connections, be sure to optimize your profile by including your professional background, areas of expertise, credentials and affiliations.

Blogs are also an effective prospecting tool. You can, for example, pick from 4 to 6 top blog posts, package them into an email and send them to my clients. When clients forward the posts to their friends, they become viral–very fast.

Share best practices with peers

Thousands of niche networks serve every interest group and industry. There are over 400 investment related groups on LinkedIn alone. These advisor-only networks offer a wealth of insight on growing and managing your practice. And nothing helps to establish you as a thought leader like sharing best practices with others in your field.

As with all marketing efforts, define objectives in advance and be realistic when using social media. Metrics such as open-rates, click-throughs, response rates and referrals are key. Building a social media campaign takes time. To ensure success, follow these helpful hints:

? Do work with your legal and compliance departments. Social media is new, and regulatory guidelines are evolving. Commentary posted in a public forum should be treated like advertising, so be sure your legal and compliance departments review posts in advance to protect your firm and your clients. And remember Rule 206(4) of the Investment Advisor Act of 1940: Financial advisors are prohibited from using testimonials about themselves or their work in any way.

? Do not be overly promotional. Social media is about networking and making connections. A direct sales pitch is the fastest way to turn off other members.

? Do not address service issues or confidential matters using social media. Should issues arise, convey clearly that service is your top priority. Provide a phone number where members can contact you or your service team directly–and confidentially.

? Do stay active. Publish an online newsletter. Contribute to blogs. Share useful articles and links. Post comments, answer questions and start conversations. Update your profile as you join new organizations and clubs. And whatever you do, be sure to let the members in your network know.

Laurence P. Greenberg is president and CEO of Jefferson National Life Insurance Co., New York, N.Y. You may e-mail him at lgreenberg@jeffnat.com.