Facebook’s (FB) $19 billion purchase of WhatsApp, a messaging application used by about 450 million mobile-device owners worldwide, may not make financial sense to all observers. But, the strategic move, announced Wednesday, should be taken very seriously by financial advisors and their broker-dealers, experts say.
WhatsApp is taking on messaging titans like Twitter (TWTR), Google (GOOG) and Microsoft’s (MSFT) Skype. It’s adding about 1 million users every day and is the most popular messaging app for smartphones, according to OnDevice Research.
“This is another wake-up call about how critical mobile communications is … for financial advisors,” said Stephanie Sammons, CEO and founder of Wired Advisor, in an interview with ThinkAdvisor. “It’s important that they are accessible via mobile through permissible means and are responsive, regardless of the device.”
Of course, compliance departments are rushing to embrace advisors’ use of such messaging apps.
“It’s a challenge, if you are a regulated professional and need to abide by the rules for archiving conversations,” said Jennifer Openshaw, president of Finect, a social media platform for the financial industry, in an interview.
Broker-dealers, like Raymond James (RJF), agree.
“Currently Raymond James advisors are able to chat and send messages through Facebook, because we are able to monitor and archive this activity through our Hearsay Social platform,” said Katie Berg, product manager of digital assets, in a statement. “More broad use of text and instant messaging is not currently permitted with prospects or clients for the same compliance reasons, and the ability of firms to track and archive the communications are not yet fully developed.”
However, as these tech tools grow in popularity “and clients’ expectations are raised, regulators and technologists will develop systems and policies for meeting client needs–which in this case, would be the broader ability to monitor and archive the communication,” Berg said.
Still, other experts say, Facebook’s purchase of WhatsApp is a significant communications development for advisors, for both broader professional and personal reasons. “It’s exciting in terms of the connectivity and growth. We are really seeing a switch to mobile [devices],” said Amy McIlwain, president of Financial Social Media, in an interview.
McIlwain says that she’s used WhatsApp when traveling overseas. It allows her to avoid paying $0.99 when sending a text message to someone in another country.
Advisors might want to use it when reaching out to clients on vacation or when they themselves are out of the country.
“I was at a conference two weeks ago,” she added, “and an advisor mentioned using it in Asia … to communicate with someone at his broker-dealer.” The advisor could send photos with WhatsApp, too.
“I would say you shouldn’t look at WhatsApp as the next Twitter,” McIlwain explained, “but as a communication tool to use with others who use it. If you don’t respond to [a client or prospect’s] message, someone else will.”
According to Steve Garrity, founder and CTO of Hearsay Social, a Fidelity Investments’ survey found that two-thirds of U.S. millionaires would like to use electronic media to communicate with their advisors, “so the time is now for advisors to meet them there.”
For Openshaw, the Facebook-WhatsApp merger speaks to four trends advisors and broker-dealers can’t afford to ignore:
1. Transform or fade away.
“If you’re not on social media, you don’t exist,” she said. “And this deal underscores the need to be current, when it comes to technology and communications. Advisors who are career changers or are young know they are expected to use social media.”