Chad Bockius (left), the CEO of Austin-based Socialware, has been following the use of social media in the financial-services industry for several years. In mid-2008, he helped start Socialware, which provides firms in the field with software and services to support their business growth using social media.
The firm made news in late May, when a client, Morgan Stanley Smith Barney, said it would be allowing its advisors to use Twitter and LinkedIn. And the broker-dealer American Portfolio Services said June 1 that it would soon begin using Socialware to expand its advisors’ use of social media.
AdvisorOne spoke with Bockius about what Morgan Stanley’s announcement and regulatory developments affecting social-media mean for the industry.
How are advisors using social media today?
Bockius: LinkedIn is the most widely used site, and about 60 to 70% of advisors use Facebook and Twitter. We have found that 40% of advisors are violating policy to drive their businesses. Thus, firms can take their time with social media, but advisors are figuring this out on their own.
Prohibition can be policy — but it’s not being adhered to. This also means that FINRA or the SEC could go towards fining firms if their policies are not being enforced.
Social networks will be as valuable over the next three years as e-mail has become. Advisors will use it, or they may switch firms to do so.
What’s your assessment of where the broader financial-services industry is with respect to the use of social media?
There’s been a lot of news in the past few weeks, and its shaking up the industry — as Morgan Stanley is the first wirehouse to [announce a policy] to do this. They will be accessing social media and using it to drive business forward, which is really what everyone wants to do.
Why is the news about Morgan Stanley and its social-media policy important to your firm and to the industry?
What makes this an interesting development for Socialware is that it’s an example of deploying this type of capability to one of the largest broker-dealers in the industry. The wirehouses have tens of thousands of users. This means that we’re taking social media and making it scalable.
It must flow into core compliance functions and be integrated with existing archiving and supervision teams to allow them to do what is required, such as archiving e-mail and instant messages.