Web Expert Unveils Social Media’s Untapped Client Riches

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.