Educating Advisors About Social Media

On October 3, 2011, In Financial Services Social Media Marketing, Financial social media marketing, By Bruce Johnston
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How Firms Are Complying With FINRA 11-39

By: D. Bruce Johnston, President & CEO

As social media begins to play a more prominent role in the everyday lives of advisors clients, advisors broker-dealers are taking a more active role in training and educating them on the power of social media.  Certainly, prompted by the training and education mandate outlined in FINRA 11-39, some firms view social media as a recruiting and retention tool.  While some of their less than agile larger competition struggle with identifying archiving solutions, they are plunging into what I consider the next frontier – education of the advisor at the “user” level.

There is no question that excellent archiving solutions exist, and there is a size and capability solution to fit all.  The real issue is how do you drive training to the Registered Representative and Advisor level.  Until their trained, the use of social media as a client acquisition and retention tool will be in the cloud, just like the best archiving solutions.

The following may serve as a template for what one cutting edge broker-dealer, Madison Avenue Securities, is doing to satisfy FINRA 11-39 training and education requirements, while at the same time differentiating themselves as an industry leader in the race to harness the power of social media.

I would welcome your comments and examples of what other broker dealers are doing to help their Registered Representatives leverage social media.

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For the New Financial Social Media Marketers, the Customer Will Be King

On March 5, 2011, In Financial Services Social Media Marketing, By Bruce Johnston
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Will money managers soon be showing their customers more love?

With pressures from outside the industry, most notably from banks, I believe the answer is a resounding “yes.”

My view is as the customer service benchmark is being raised outside of the industry, money managers too will find themselves held to a higher standard by investors and advisors.

Part of the pressure is coming from the rise of mobile technology, especially the sudden ubiquity of iPads, and this weeks introduction of the new iPad2 which are conditioning people to expect instant access to information 24/7.    

Such initiatives are not unknown in investment distribution. It’s something asset managers have been trying to teach through value-add programs — to be more sensitive to the clients’ needs as I mentioned in a recent Hannah Glover article for Ignites.  It’s time for asset managers to apply the same standards to both advisors and investors.

As firms study and adapt to the new world of enhanced customer service, they should not overlook creative and cost-efficient solutions that are close at hand; especially social media blogs and networks that offer financial marketers a convenient and inexpensive way to differentiate themselves in the marketplace.

To gain a basic knowledge of how you and your firm might begin to understand this social media phenomenon better I invite you to download an Introduction to Social Media which I co-authored with Jeffrey Young from Huntington Bank.

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Asset Managers Struggle to Understand Social Media’s Full Power

On March 5, 2011, In Financial Services Social Media Marketing, By Bruce Johnston
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In a world driven by a rational, fact-based process to investing, is it any wonder fund companies struggle with social media? After all, social media allows for conversation and comment by anyone; transparency, as such comments are out there for all to see; experimentation, as users frequently change their content; and improvisation. These are not qualities that go hand in hand with the world of ’40 Act funds.

Fund companies are being asked to evaluate how social media may help them connect with their employees, distributors, financial advisors and customers. In no particular order, I have listed some of the areas in which fund companies underestimate social media’s power. Gaining a better understanding of these areas can make a difference in whether a fund company can fully seize the opportunities that social media presents. 

Underestimating the need for social media policies and strategies

Firms fail to understand that to be effective in social media, they need to have well-thought-out policies in place. Progressive companies are implementing electronic communications policies that establish strict guidelines for employee participation on blogs, chat rooms and other social media. They are also not bashful about imposing these same policies on employees providing opinion or advice, even if it is from their personal computers.

Firms that establish these rules early foster an environment that promotes social media as a way to connect to their clients, rather than through their products. These companies are also able to engage and solicit their employees’ opinions on social media, which will benefit how the companies develop such tools.

When it comes to strategy, companies already know how the success of any initiative starts with a well-articulated game plan that clearly establishes the firm’s objectives. The goals for your social media program should be no different than other programs your firm is running. For example, increasing brand awareness and establishing thought leadership will increase the number of FAs selling your product, resulting in increased assets under management. However, think in terms of continuity programs, not “one and done” campaigns.

Underestimating the risks to firms of not adopting social media

During a recent webinar focused on social media, a Prudential executive offered these examples of the risks for them of not adopting social media:

  • They wouldn’t be taking full advantage of this important channel to get information about Prudential out there in a way that will give the firm credibility with different audiences.
  • Social media better positions them to control the conversation about Prudential and not have others control it for them.
  • They do not want to run the risk of not being forward-thinking with today’s generation of young talent. They want to be the employer of choice for today’s young people.

Ultimately, more fund companies need to develop an authentic voice that exhibits and embodies a firm’s core brand attributes and values. They need to adapt to each social media environment in which firms interact, as this is key to connecting with their diverse audiences.

Underestimating the use of social media by the financial advisors with whom they do business

A recent survey by financial marketing firm LederMark Communications found that most financial services professionals – 85% of those under age 50; 50% of those who are older — are using social media. And many of them — up to 40% — say it’s helping them build their business.

These advisors may be taking the right approach, as the Spectrem Consulting Group study “Social Media and the Investor” notes:

  • Roughly 63% of Twitter users would pay attention to investment tweets.
  • Precisely 46% of YouTube users and 41% of Facebook users would seek investment information from these forums.
  • Social media networks are also popular sources for developing new investment strategies and seeking buy/sell advice.

Within that context, firms are doing their sales, marketing and wholesalers a disservice if they don’t arm them with the same communication tools their core audience and customers are becoming comfortable with.

Overestimating compliance risks

Leading firms are making the most of this opportunity by crafting strategies that comply with  FINRA Rule 10-06 guidelines on social media. Of course firms should not take the compliance risks surrounding social media lightly. But firms that generalize social media as a compliance conundrum and thus don’t partake are missing out.

As advisors develop and leverage social media applications that reach hundreds of potential customers, fund companies need to identify and make sense of those networks that maximize their brand and the networking capabilities of their wholesalers.

In the new world of social media, the common theme prevalent throughout all industries is ABC — Always Be Connecting.  For fund companies, it’s no different.

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SOCIAL MEDIA: Can Financial Advisors and Asset Managers Afford to Miss It?

On May 12, 2010, In Uncategorized, By Bruce Johnston
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By D. Bruce Johnston, President, DBJ Associates

Much has been discussed in the industry around Financial Advisor’s use of social media. Should they use it? Is it valuable? What are the risks? What are the compliance issues? Can we afford to wait?

Similar questions are being asked by the major asset management companies and distributors.  Firms such as Putnam have aggressively moved onto Twitter. TIAA–Cref, Fidelity, Franklin Templeton, American Century, Raymond James, USAA, Russell Investments, Virtus and Pimco are also on Twitter.  Now Northern Trust has entered the arena with Vanguard possibly next. What issues did they struggle with and more will be discussed.

Please join me June 2nd at 2pm EDT as I participate in an interactive round table panel with other industry experts from Fidelity, American Century Investments and Socialware.  We will be discussing how advisors are using social media to communicate with clients and peers and you will able to tune in online from the convenience of your desk.  We will also be discussing how firms are utilizing social media to keep advisors and shareholders informed.  The free webcast will be streaming live online and you can sign-up, watch the presentation and submit questions through the BrightTALK website.  If you can’t attend live you can also tune in to the recorded version anytime afterward on-demand.

To make sure your question gets answered we welcome your questions prior to the webinar.   If you would like to submit a question prior to the webinar please do so in the comment section below or at our Twitter sites: http://twitter.com/DBJAssociates or http://twitter.com/Advisolocity.

You can sign up for the webinar here: http://www.brighttalk.com/webcast/20874

We look forward to having you join us on June 2nd at 2pm EDT.

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Advisolocity a Transformational Distribution Resource Needs Your Help

On February 17, 2010, In Uncategorized, By Bruce Johnston
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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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Advisolocity social media report follows nationwide FINRA webinar

On February 4, 2010, In Uncategorized, By Bruce Johnston
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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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How are RIAs approaching social media?

On January 16, 2010, In Uncategorized, By Bruce Johnston
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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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What FINRA doesn’t want you to know about social media

On November 5, 2009, In Uncategorized, By Bruce Johnston
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By: Bruce Johnston, President, DBJ Associates 

Topic A at the recent Securities Industry and Financial Markets Association Annual Meeting (SIFMA) was what to do about the fastest-growing communications phenomenon since the invention of the Internet: the explosion in social networking.

Whenever compliance and communications come together there is sure to be a tussle and this meeting was no different. Chairman and CEO Rick Ketchum cited the current policy as “currently constructed, these sites would not permit you to easily supervise these communications. For that reason, most firms prohibit their employees from using these sites for their business.”

Still, trying to hold back the social media communications tsunami is not likely to last. The cost of not communicating to advisors and clients through their preferred vehicles does not make a lot of long-term business sense.

Mr. Ketchum readily admits that holding back the tide is not an answer either, “Nevertheless, interest in these sites will not go unabated.”

Unfortunately, the way forward so far from the FINRA perspective seems blustery at best, characterized by ill-informed awareness of archiving technology, fact-free assumptions about user demographics, a confounding secretiveness not appropriate to an industry hammered for lack of transparency, and a rather limp offering of notice instead of real rules.

  • The archiving technology is already here to be fully compliant. According to Mr. Ketchum, “We continue to witness the advent of technologies that will challenge your (distributors’) ability to ensure compliance with regulatory requirements. For example, as currently designed they may not allow you to archive and maintain the communications on your own books and records.” Pat Allen of AdvisorTweets, points out that the independent advisors she tracks for her blog are archiving and maintaining their records scrupulously. I uncovered several solutions; including Lifestream Backup, now being branded as ”Bakupify”, available for $4.95 per month. Instant messenger FaceTime released a secure portal for enterprises seeking to monitor employee content posted to blogs, wikis, webmail and social networking sites such as Twitter, Facebook and YouTube.
  • Social media is not just for kids anymore In a line that is darn near close to a call to “grow up,” Mr. Ketchum said, “Many registered representatives, particularly younger ones, want to use social networking sites to communicate with friends and potential customers.” By conflating friends and customers, Mr. Ketchum draws an inference that somehow social media and irresponsible behavior go hand in hand. Also, it completely overlooks the more seasoned professionals who make use of the new technology tools.
  • Why does FINRA put social media policy behind locked doors? An even more baffling turn came out of the meeting with the announcement of a secret committee to review policy and propose change. “We have formed a Social Networking Task Force comprised of industry participants to explore how regulation can embrace technological advancements in ways that improve the flow of information between firms and their customers—without compromising investor protection,” Mr. Ketchum said. In particular, the group is consulting with FINRA officials on real-life queries, such as how frequently firms have to monitor third-party postings on their own blogs, and how much liability they bear for manipulative or fraudulent postings from the public. Other topics, such as how to capture social networking communications, also are being discussed. When asked who was on the committee, Thomas Pappas, vice president of advertising declined to name the firms involved in the taskforce, but said they include brokerages with independent sales forces that want to use networking sites to advertise their services.
  • All this for just a notice? At the conclusion of the meeting, Mr. Pappas said he did not expect the self-regulatory organization to release rules on the issue. “I think we can probably get where we need with a notice,” he said. A notice without real regulations behind it is sure to punt the social media question further down the road and embroil compliance officers and marketers in endless hours of discussion and compromise.

It is well documented: time spent on mutual fund websites is diminishing.  This might be a clue that shareholders are tired of being communicated “to” by a no longer preferred communication tool. Why not listen to the shareholder and ask them about their communications preferences? Handled properly the correct solution would allow for the needed transparency that FINRA advocates in word, but oddly enough, undermines in deed with this lackluster, secretive and uninformed approach to one of money management’s most important issues.

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