Advisolocity a Transformational Distribution Resource Needs Your Help

February 17th, 2010

By:  D. Bruce Johnston, President, DBJ Associates

Over the past year, we have talked about the transformations taking place in investment distribution. 

I am certain you are viewing first-hand one of the major changes in wealth management – the shift of resources from traditional marketing to social media and networking. 

This resource shift is sure to accelerate as marketers and compliance officers now find common agreement. The release of FINRA’s 10-06 ruling has removed the last impediment to utilizing the cost-efficiencies and creativity of social media programs. A new social media marketing compliance lore will soon be coming into existence.

I’m pleased to announce that my colleagues and I are almost ready to launch our new site – Advisolocity.

Advisolocity is a transformational distribution resource designed for this present moment. Advisolocity – which stands for advisor velocity – is a collaboration of creative marketers, investment distributors, as well as social media and technology specialists.

Advisolocity is dedicated to supporting the business development efforts of advisors, money managers and other service providers who are endeavoring to attract and retain a greater share of investment assets.

Your comments to me have proven invaluable in the past and I would welcome a chance to ask your opinion of our exciting new effort. Here are two of our sample pages:

As a way of saying thank you for your time and comments I would like to provide you a copy of our latest white paper:  “One-2-One: How social media will allow you to conduct a thousand conversations at the same time”.  You can register and receive the white paper by clicking here: http://bit.ly/a4FiM9  If you prefer and would rather not go through the registration process – we are concerned about protecting your privacy – send me a request at: bruce@dbjassociates.com 

Thanks for your help and we look forward to your comments.

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Full speed ahead: FINRA social media regs remove “excuses for delay”

February 16th, 2010

By D. Bruce Johnston, DBJ Associates

Researchers and compliance officers are rallying around FINRA’s landmark 10-06 rule on social media-driven investment communications to give guidance to legions of newly energized investment marketers.

Marketers rejoice: Hedges

Marketers rejoice: Hedges

“We’re seeing new levels of enthusiasm among marketing communications project managers,” said Zach Hedges of Advisolocity recently. “Marketers on a tight budget see sunlight through the clouds.” He credits freeware networking site Linkedin, Twitter and WordPress for a lot of the investment marketers regained optimism.

“They are  just glad they can start telling a story again. That’s all,”  he added.

Financial research firm Nemertes signals happy days for thrifty marketers too in an online report: “The new guidelines bring clarity, but remove excuses for delay.”

Without delay, it’s full speed ahead for SMM.

However, Nemertes cautions the tidal wave of consultants, archivists, communications specialists, compliance firms and social media strategists, to get busy carefully: “Plan to converge or add social media features and capabilities with security solutions for communications media like email and IM.”

Meanwhile, the legal profession is hard at work decoding 10-06 for peers and marketers. Winston & Strawn’s Robert Boresta is scheduled to speak at Knowledge Congress’ Live Webcast on FINRA Guidance on Social Networking Sites on May 4.

Will low budgets prevent marketers from taking advantage of all of this good news? Not likely: media types can breathe easier following a new study quoted by Marketing Pilgrim that while 40% of marketers report budgets down for the year, 70% plan to redeploy their resources from traditional print and advertising to Twitter and Facebook marketing.

The resource shift is sure to accelerate as marketers and compliance officers now find common agreement.

The last impediment to utilizing the cost-efficiencies and creativity of social media programs has been removed. Perhaps a new era of responsible, spontaneous, transparent communication can help put back some heart in the troubled securities industry.

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Edelman Study answers the question: Whom do you trust?

February 11th, 2010

For Financial Advisors, trusted communicator is job one

By: D. Bruce Johnston, President, DBJ Associates 

Brokers and advisors are the most trusted sources for providing accurate information on investments, followed by friends or family, according to the 2010 Edelman Trust Barometer. CEOs landed dead last as least trusted.

Highlights from the survey include:

  • Financial performance now scores at the bottom as a trust factor.
  • Transparency and honest practices took the number one spot
  • Most trusted financial institutions: Local banks were number one, followed by mutual funds and insurance companies

With all of this good news, trusted advisors may still not feel like cheering – especially when confronted with constrained marketing budgets.

“Even though resources are scarce, advisors with a story to tell can still create news,” Advisolocity’s John Drachman said recently. “From free interactive press releases, to white papers and webinars, there are many cost-effective ways to engage customers and prospects that do not cost that much.” The present moment may represent a historical opportunity for advisors.” He added, “Five short years ago their trustworthiness hovered near the bottom of The Barometer.”

What should you do now? Here are Five Things FAs and Advisors should be doing to benefit from this shift in sentiment:

First, they are evaluating their current communications strategy – With so many sources of communication available to your clients today it is imperative that you evaluate and leverage as many as you can.  FINRAs recent clarification around the rules governing social media provides a completely new opportunity to leverage. Don’t let your own lack of expertise in this area prevent you from leveraging these valuable resources – seek professional guidance and input.

Second, evaluate your “customer engagement strategy” – This used to be referred to as customer service but in the new world of communication it’s about “engagement”.  Today’s customers view frequent and honest communication as the most important factor by which they judge financial services firms.  How does your current engagement strategy match up?

Third, evaluate the resources and strategy you have allocated to your marketing programs and branding campaigns – Industry estimates show the number of clients receiving comprehensive financial planning will increase by 20-25% over the next year or two.  What are your strategies for establishing and promoting your brand?  How much time are you devoting to client acquisition and retention? 

Fourth, evaluate your resource allocation to the “Emerging Markets” – I’m referring to the next generation of investors, those between the ages of 25 and 34. This is an often ignored demographic for a variety of reasons but 75% of this group say FAs and Advisors are who they first turn to for financial advice.  This may be that “once-in-a-career” opportunity to make significant inroads into this group assuring future growth for your firm.

Fifth, evaluate what differentiates you from your competition – are you using all the tools at your disposal?  Successful FAs and Advisors will leverage both traditional and on-line communication applications.  To enhance “customer engagement” they will leverage market commentary and portfolio manager market overviews in building their financial planning practice. Have you clearly articulated the advantage working with you brings to your clients in terms of achieving lifestyle and financial goals?

Future success and growth of your business will come from a combination of increased interest among investors in fee-based financial planning models, and how well FAs and Advisors position themselves to take advantage of this once-in-a-career opportunity.  Those assessing their business model as outlined above will certainly stand a better chance of success than those adhering to the status quo.

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Advisolocity social media report follows nationwide FINRA webinar

February 4th, 2010

By: D. Bruce Johnston, President, DBJ Associates

The Financial Industry Regulatory Authority’s slightly relaxed oversight standard for interactive blogging in the money management world means tweets are here to stay, according to John Drachman, writer and creative director for The Drachman Group, Inc., and Advisolocity, a social media forum for advisors.Capture

“This is something to cheer about,” Mr. Drachman added.

According to FINRA, if a blog is used to engage in real-time interactive communications FINRA would consider the blog to be an interactive electronic forum that does not require prior principal approval.

“The social media compliance solution has always been about the blog,” Mr. Drachman said. “Entanglement and adoption, which address where the content comes from and when a firm adopts it as its own, are easily avoided when the content is free and interactive.”

Save product discussion for a firm’s web site, he suggested. “The interactive blog, on the other hand, is a real-time conversation about a firm’s ideas.”

Mr. Drachman said that all of the attention being paid to FINRA this week has resulted in increased call volume, which has prompted the release of Advisolocity’s first white paper: One-2-One, How Social Media Lets You Have 1000 Conversations at Once. He invited financial professionals to register here and download their complimentary copy of the paper directly from the Advisolocity blog.

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Esperanza International provides hope to Haitian earthquake victims

January 21st, 2010

By:  D. Bruce Johnston, President, DBJ Associates

As we struggle with how to provide support for those suffering through the horrors of the earthquake in Haiti, my friend Dave Valle and his great organization Esperanza comes to mind. 

Dave has dedicated his post-baseball life to Esperanza International, a charity whose mission “is to free children and their families from poverty through initiatives that generate income, education and health, restoring self-worth and dignity to those who have lost hope”.

Just days after the Haitian earthquake hit Dave had accounted for his team in the area, mobilized them and sent the following letter to supporters of Esperanza:

Thank you all for your prayers, thoughts and support of Esperanza’s work in Haiti.  I wanted to give you a quick update on our progress on the ground in Port Au Prince.

All of Esperanza’s staff are safe.  The Esperanza office is located in the Northeast portion of Haiti which did not sustain much damage.  Carlos Pimentel, Esperanza’s VP of International Operations, is in charge of our Rapid Response Strategy.  He has served in the DR for 20 years on the Dominican Republic’s Disaster Relief and Mitigation team.  His knowledge and contacts on situations like this are second to none on the island.

We have begun a herculean effort on the ground last week as Esperanza leads a coordinated effort of relief through our large network of partners and churches who, along with Esperanza, have a history of work in the communities.  This is critical in the distribution of aid.  We are known entities, who have been serving the communities for many years.  This will prevent much of what you are seeing on the news reels…fighting for food and unorganized distribution, chaos.

Esperanza had 12,000 food packs in storage as part of our disaster preparedness plan for the island (tropical storms and hurricanes) that were sent immediately. There is more on the way.  We now have a warehouse on the DR border where we are moving supplies from Santo Domingo (where prices have not risen yet) to the warehouse, then from the warehouse to P AU P for distribution to our network.  As of yesterday, Esperanza opened a new office and distribution center in Port Au Prince in alliance with one of our partners that will serve as our base of operation.  We have 2 Doctors there also to provide medical care.

There are many people and organizations coming along side Esperanza to provide support.  We will need more.  

Pray for Esperanza’s leadership in this huge undertaking.  And Thank You for your support over the last 15 years, helping Esperanza to become an organization that has the capacity to respond in this manner and one that others look to for leadership in a time such as this!

Just getting started!

David Valle

Under Dave’s leadership Esperanza consistently invests over 97% of your donation.  If you are looking to help Esperanza has an immediate necessity, and is requesting from their partners abroad, gifts in cash, which will help expedite the arrival of relief to the region. A $40 donation to Esperanza´s Disaster Relief initiatives will provide a family with the basic necessities (food, bottled water, healthcare kits etc.) for ten days.

For more information on how to help, please contact the Esperanza Disaster Response Group at disasterresponse@esperanza.org. This email address is being protected from spam bots, you need Javascript enabled to view it

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How are RIAs approaching social media?

January 16th, 2010

By:  D. Bruce Johnston, President, DBJ Associates

With hope and fear. If they can publish a few blog posts, advisors can extend the life of a public relations story nearly effortlessly. With social media and its ability to generate attention inexpensively, it’s hard not to consider it.

 The difficulty comes in when you ask an RIA what they are willing to pay for it. An RIA must opt for at least a minimal, consistent effort to communicate their subject matter expertise to their prospects.

So, while the vehicles underlying all that publicity are almost free, the talent to assemble content and distribute it is not.

And that’s the rub: RIAs need to make a commitment to reach out and sustain an effort to attract new prospects into their loop. Whether an RIA is ready to take the deep dive into social media, he or she needs to answer four questions.

 

  1. Do I like the idea of using nearly free marketing tools to attract prospective clients? This one is easy: “Yes.”
  2. Should I “do-it-myself” — or recruit professionals to help me? The RIA must decide whether they want to take time away from client-facing activity to master the web’s ins and outs. Caveat: Do-it-yourself errors can be a deal breaker.
  3. Am I committed to spending some money? RIAs don’t have to commit to hefty retainers, but they do need to commit  somewhere between $5,000 to $10,000 initially to dedicate to professional resources.
  4. Am I willing to experiment a bit, journey into unknown territory?  I have found that this is the most important question for advisors to answer. An experimental sense of social media’s possibilities is the key. There is no locked in blueprint for how to proceed. Social media strategies are a trip through a new frontier; the efforts are flexible, motivational and engaging when done well. And, if you make a mistake, they are pretty easy to correct.

 

Why is it that a prospect who won’t return an advisor’s phone call won’t hesitate to connect with that advisor on LinkedIn? Why is it that a prospect will unsubscribe from an advisor’s newsletter and then immediately start following that same person on Twitter?

I think it’s a matter of control: individuals like to pick and choose what they want from a service provider and who they want to have a conversation with — and that includes RIAs.

But advisors cannot join the conversation if their potential prospects don’t know where to find them.

 

 

 

 

  

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“Five of the Six Key Trends Other Than Aging” that will completely alter the marketplace for Wealth Advisory services revealed.

January 15th, 2010

By:  D. Bruce Johnston, President & CEO

According to a summary report by Doug Anderson, SVP, Research & Development, The Nielsen Company, growth will be hard to come by in the coming decade and there are “Five Key Trends Other Than Aging” at work which will make growth extremely difficult.  DBJ Associates provides questions wealth advisors may want to ask of themselves in order to benefit from these trends, along with the answer to: “What’d they miss?”

  • Growth is found in less-developed world.

By 2030, world population will have grown by around 20%. Only 3.2% of this growth will come from the more developed world.

In the U.S. nearly one in three households will be headed by someone over the age of 65.  Household size will decline across the board with a large share of the population living in one or two person households.  Middle and upper middle classes will shrink the share the most.

How are you positioning your firm to deal with multiple “heads-of-households” living under one roof?  How is your firm preparing to grow in an environment where the traditional source of new customers is shrinking and the power of the decision maker is becoming blurring across multiple generations?

  • U.S. based wealth advisors will be locked into market share wars.

The other side of the coin of an aging U.S. population is that the share of households that have children will continue to decline. By the middle 2020s, the share of U.S. households with children under 18 will fall below 30%.  This makes it important that wealth advisory firms create and implement client retention strategy’s that span more than two generation’s today.

With your firm’s future prospect pool guaranteed to drop by 30% what strategies have developed and/or implemented to strengthen relationships with your clients, their siblings and THEIR siblings?   

  • Multi-cultural marketing will be essential when selling to families with children.

The majority of population growth in the U.S. will come from new immigrants and the children they have in this country. Since most immigrants are young, families with children will become more ethnic, more quickly, than the total population. By 2025, the majority of families with children in the U.S. will be multi-cultural (Hispanic, Black, Asian, etc.). Less than half of families with children will be native born non-Hispanic White.  Your firm’s future growth potential lies in your ability to appeal to this emerging demographic.

What multi-cultural marketing programs does your firm have in place to appeal to this emerging demographic?  What are your plans for adding bi-lingual advisors to your practice?

  • Older Consumers Have New Needs

Baby Boomers will seek to rewrite what it means to be old exactly as they have rewritten what it means to be children and adults. Wealth Advisor’s willing to reach out to Boomers as they age can tap into a large and growing marketplace.  According to Daniel Pink, author of DRIVE, “The Surprising Truth about What Motivates Us”, 100 Boomers turn 60 every 15 minutes and they’re all seeking “Purpose” for the rest of their lives.  Wealth advisors not willing to market to persons over the age of 65 will miss out. This is a demographic that research suggests is connected online 98% of the time.

What strategies has your firm put in place to reach this changing Boomer demographic?  What, if any, of the new social media applications has your firm implemented to reach this demographic? 

  • As population growth slows in the U.S., so will spending on consumer goods.

Household size will decline across the board and so will consumer spending. The impact of these two trends means that after 2020, per household spending on packaged goods will begin to fall. The current recession is already impacting spending in the short-term. Growth will be very hard to come by both now and in the coming decades.

With fewer dollars available for consumer goods how is your practice positioned to demonstrate why your clients should be spending even closer attention to their financial planning needs?

Social Media is the missing trend.  Those wealth advisors that have an experimental sense of social media’s possibilities will benefit.  There is no locked in blueprint for how to proceed. Social media strategies are a trip through a new frontier. The efforts are flexible, motivational and engaging when done well. And, if you make a mistake, they are pretty easy to correct, unlike the “Five Key Trends Other Than Aging”, they’re case in stone.

 

 

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Six Suggestions for Getting Your Mutual Fund “Discovered” in 2010

November 19th, 2009

By: D. Bruce Johnston, President & CEO, DBJ Associates

 

Numerous articles have been written lately on the massive rebound of stocks beginning on March 9, 2009.  Most mutual funds have enjoyed a nice performance rebound as well.  If your mutual fund is one of those enjoying this rebound in performance “How do you get “Discovered” in 2010?”

For that answer I turned to Dan Sondhelm, SunStar Strategic.  Dan specializes in preparing and getting asset managers in front of the appropriate media outlets to tell their story and go from “undiscovered” to discovery. 

Dan was quick to point out that most mutual funds with significant assets grew as a result of proactive selling activities – an individual fund is rarely “discovered” on its own. With more than 10,000 funds available to investors and their advisors, competition for share of wallet is fierce with 80-90% of fund flows going to the top 20 firms.

Dan’s 6 Comprehensive Suggestions to Getting “Discovered” in 2010:

  1. Have a written strategy.  Dan’s first suggestion is you start by developing a written strategy. Most mutual fund companies fail to get discovered because they haven’t reduced to writing their strategy to capitalize on their good fortune. 
  2. Have management buy-in.  Ensure you have buy-in from management and a commitment to the resources it will take to implement your strategy. Lack of buy-in, ample resources and accountability will make or break your program.  Predetermine an “owner” for every initiative, how the initiative will be tracked and how will success be measured.
  3. Continue your commitment to excellent performance.  Review your pricing model.  Ideally your product should be priced below 1%.  Also, evaluate the channels you are selling your products in to make sure you are maximizing your efforts and capital commitment.  No need to try to be all things to all people.  Focus, Focus, Focus.
  4. Make sure your products are on the major platforms.  Being on the Schwab, TD Ameritrade, Fidelity and Pershing platforms are important but not enough.  Establish relationships with the “gatekeepers” (e.g. research, key accounts, marketing, event planning, etc.) and make sure that you understand how each of these groups functions and although they separate in title, how are they interrelated. These platforms, at a cost to you, provide marketing opportunities throughout the year.  A strong relationship with your account manager will assure that you are alerted to the opportunities for proprietary mailings, sponsorship opportunities at local and national events in advance allowing you to make the most out of the opportunity. Leverage daily and weekly sales data provided by the platforms to communicate market, investment, performance and business building approaches to those RIAs that are supporting your sales effort.
  5. What’s your story?  Value shop, growth shop, GARP, disciplined or highly disciplined are not sellable stories.  Bring it to life. What makes your strategy different than your competition? How do you select stocks? What are interesting themes in your portfolios? What good decisions did you make?  
  6. Telling your story.  Provide timely information on your Web site. Regularly post themes about your fund and the good decisions you made. If your site doesn’t allow you to add timely information, upgrade it. Advisors won’t come back if there is nothing new. Engage the media. Let the financial press sell you. Then leverage the third-party endorsed reprints in your other sales and marketing efforts, in print and on your Web site. Be accessible. Advisors want to be able to communicate with the portfolio manager directly. Quickly respond to RIA calls. Showcase portfolio managers in quarterly Webinars, than post the event to your Web site. Drive RIAs to your Web site with a monthly Email marketing program to tell your story. Strategy and performance are just two key areas for content. Others include news media reprints, promotion of upcoming Webinars, attendance at an advisor conference, etc.

Thanks Dan for your time and insights.  As me, Dan would appreciate any comments you might have regarding his suggestions and would welcome any additions.

To read the full context of Dan’s blog “New Year’s Resolution: Get “Discovered” in 2010” please visit: http://www.fundfactor.net.

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FocusShares’ Erik Liik tells why social media marketing is an ETF start-up’s best friend

November 18th, 2009

By: D. Bruce Johnston, President, DBJ Associates

Exchange Traded Funds (ETFs) have grown so quickly for so long, it is easy to forget that Erik Liik, the charismatic CEO and President of FocusShares was there at the beginning. Erik played a key role in the launch of the very first ETFs, the legendary Word Equity Benchmark Shares (WEBS), which provided access to international country-specific indexes in 1996.

Four years later, Erik co-authored with Financial Research Corporation, the landmark study “The Future of Exchange Traded Funds,” a prescient analysis of the challenges and opportunities confronted by ETFs. That document uncannily projected almost to the penny the asset growth that ETFs would experience from 2000 to the present. Erik’s passion for the ETF concept took a giant leap in 2008 when he and a small group of investment colleagues began building the groundwork for another, unique foray into ETF world. This time around Erik and company are setting out to build a first-of-a-kind, patented, principal-protected ETF target date series called FocusShares.

While pausing recently in his search for institutional funding, Erik met with me to discuss his views about the role social media marketing will play in launching his ETF program once funding is secured. He also shared his observations on Cerulli Associates’ just-released study.

DBJ                 When will you launch FocusShares?

Erik                As soon as we have completed financing and or strategic partnership, we are set to go. We have the marketing and sales teams in place and ready to move once the whistle blows.

DBJ                 Will anything be different your FocusShares’ launch as opposed to WEBS 13 years ago?

Erik                A few things will stay the same, but much will be different. We’ll have a simple, standard sales kit and broker selling guide. Beyond that, we intend to take maximum advantage of the many freeware or near-freeware tools available on the Internet to get the message out.

DBJ                 For instance?

Erik                We’ll use a very interactive press release approach to drive readers to our web site and blog which will be the centerpiece of our thought leadership marketing strategy. We intend to engage and build conversations with as many in our peer network as possible: individual investors, institutional investors, DCIO platforms, RIAs, wirehouses, the press and all who are looking for a better alternative to conventional target date portfolios.

DBJ                 How important a role will social media marketing play?

Erik                Tremendously important. In this economy, we cannot afford to overlook anything cost-efficient that can help us build a conversation about FocusShares. One area we will look at immediately is beefing up our presence on LinkedIn. Each of my partners has a contact page. Once we launch, we will have a contact page for FocusShares itself, too.

DBJ                 Are there any competitive ETFs doing something similar on LinkedIn?

Erik                Yes, AdvisorShares has a fairly high visibility on LinkedIn. They’ve done a good job of putting weekly podcasts and other information out there, although they seem to have lost a bit of interest in it. The last post up was in June.

DBJ                 That’s one of the problems with a social media strategy. You have to keep it current.

Erik                We know that going in. I told the team, we are all responsible in developing a one-to-one approach to establishing our thought leadership in this area and expanding our presence through social media efforts. It will be a lot of hard work and success won’t come overnight, but I believe we’ll have done the spade work to create lasting, long-term relationships with our clients.

DBJ                 On another topic. The new Cerulli Associates’ study came out called “Exchange Traded Funds: Threat or Threatened?” What do you think of it?

Erik                I think the title is a little cryptic.

DBJ                 It is a little cryptic. Cerulli, basing his survey on just 400 advisors, stated that 45% prefer using actively managed mutual funds in their clients’ portfolios rather than ETF products.

Erik                Well, that flies in the face of what most consider a mass exodus out of mutual funds to ETFs. It really contradicts a recent Schwab study that said 83% of RIAs prefer using ETFs in their asset allocation strategies. It would probably be helpful to have a better understanding of the advisor demographic Cerulli was referring to. Today’s ETFs provide passive exposure to markets, sectors and industry group. They are excellent tools for executing many investment strategies.

DBJ                 Will the use of ETF wrap products increase?

Erik                Yes. But wraps will not be the only way advisors and investors increase their ETF participation. Almost any investment objective can be offered in the ETF structure. To date the majority of ETFs are passive.

DBJ                 It appears that actively managed objectives and solution based objectives are the next step in the evolution of the ETF. Do you agree?

Erik                Absolutely. IndexIQ has launched a series of ETFs that actively seek to replicate various hedge fund strategies.

DBJ                 How is FocusShares positioning to meet the opportunities and challenges of tomorrow’s ETF market?

Erik                In 2008, we identified flaws in traditional target date mutual funds, which were exposed in the recent historic market collapse. Traditional target date mutual funds do not provide investors with protection of capital as an integral part of a retirement planning and nor do they provide transparency of fund investments. FocusShares, on the other hand, developed an investment methodology that would provide progressive capital protection within the ETF product structure.

DBJ                 Erik, these are exciting times for you. I wish you much luck with your new venture.

Erik                Thanks much Bruce.

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How 12 million people brand your company 27.3 million times every day

November 17th, 2009

By: D. Bruce Johnston, President, DBJ Associates

 

That’s 12 million people engaged in 27.3 million conversations on Twitter every day.  They are branding your company even if they are not mentioning you. That kind of branding is called “ignoring the non-entity.” In financial social media marketing and every other industry it’s the branding of the invisible.

This increased and increasing volume of “conversation” is indicative of the heightened adoption of social media in general and reflects a significant shift in how marketers approach customers.  The shift from talking “at” customers to having a conversation “with” them has begun in earnest. 

Watch Mad Men on AMC and see the difference between an ad monologue to many and a one-on-one conversation. Brands no longer say to their customers what they are. Rather, it is the customers themselves who are saying to the brand, “Here’s what you are to me.”

“You can’t just say what the brand is. You have to get the people to say it to each other,” says James Farley, CMO Ford. By giving away 100 Ford Fiestas to influential bloggers, 37% of Generation Y was aware of the Ford Fiesta before its launch in the United States. Is it any wonder why 25% of Ford’s marketing spend has been shifted to digital/social media initiatives? And, for those keeping score, Ford is the only U.S. auto company that didn’t take a government loan.

Social media applications, like Twitter, are where the customers, prospects, cynics and champions of your brand reside. Like it or not they are talking about your brand, forming opinions about your brand and sharing that opinion with anyone that will listen –  27.3 million times a day.

Given this new communications paradigm what should financial services product originators and distributors do?

Let’s talk about what they shouldn’t do first – they can’t cut their way to growth.  They’ve been there, done that and it doesn’t work.  It does however assure that firms doing this will lose precious ground to savvy competitors who are engaging their customers on a regular basis. 

Throwing money at wholesalers, internals and marketing types is expensive and not likely to be tolerated during this time of margin and scale compression.  Although the last half of 2009 will help margins they are still projected to be down from just below 30% in 2008 to just over 25.5% in 2009.  If investor comfort with fixed income persists firms have but one choice to achieve scale, bring in more assets. 

There I’ve already given you the answer: Engage customers through social media to improve sales, scale and margin.  To engage customers get this right: “Social media is not about being promotional or selling, it’s about engagement”.

A Wetpaint/Altimeter Study: “The World’s Most Valuable Brands, Who’s Most Engaged” ranked the top 100 global brands.  The study found those companies that are both deeply and widely engaged in social media significantly surpass their peers in both revenue and profit.  The study places brands into one of four engagement profiles.  Mavens are those firms with the highest level of social media activity and Wallflowers are those firms with the lowest level of social media activity. 

The study reports that Mavens experienced Gross Revenue growth of 18%, Gross Margin growth of 15% and Net Margin Growth of 4%.  Wallflowers saw their sales decline -6%, Gross Margin growth decline by -9% and Net Margin growth decline by -11%.  Maven results would certainly improve the three statistical areas that most financial services executives monitor on a daily basis.  Yet as compelling as these results are a recently released Forrester Research report finds financial services companies will spend only $200,000 on social media in 2009, the least amount of any industry. 

The trick for financial services companies is to create meaningful marketing content that rises above self-promotion and allows you to connect directly with your customers?  Start by listening.  Since listening is the basis of trust in all relationships it allows companies to determine what information will be the most relevant and valuable to their customers.  Use this information as the cornerstone of building a trusted relationship with your customer.  If you are concerned about where your customers might go when the equities markets return spend the bulk of your time here developing their trust.

Your customers can now get information anywhere and your urge is to sell products.  The new marketing isn’t about self-promotion; it’s about giv­ing customers what they need to become educated consumers.  We have entered the age of content and education marketing. If you want customers to see your brand as the trusted information source, you must begin to think like an information provider, not just the provider of goods or servic­es. By empowering customers with genuine news and informa­tion, a company becomes one-half of a trusted relationship.

If your customers view your firm as representing an idea or theme they care about, they will engage you on a one-to-one basis engaging in two-way dialogue.  However, if customers view you as just promoting products and services, they have to be willing to be the recipients of a one-to-many, one-way monologue. At this point more and more individuals choose to opt out of the one-way monologue.

Social media has changed the rules. Once an individual finds a better service or product through a peer network that affirms or changes their opinion, they can’t go home again. They can’t go back to the one-way monologue from a company for their sole decision-making input — no matter how good its products and services may be.

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