But Most Missing the Power of Twitter’s Five “C’s”

By: D. Bruce Johnston, President & CEO

Increasingly traders, financial advisors, investors and even farmers, are turning to twitter as a new up-to-the-tweet source of breaking market news, market sentiment and planting guidance.  Not to mention the ease of connecting with other financial advisors and traders.

The infatuation with twitters speed and ease of use may have caused some to overlook the vast power of twitter’s five “C’s” – content, context, communication, compliance, and connectivity.

This is not a new phenomenon as a January 2009 article identifies 40 Traders To Follow On Twitter. Wefollow, a directory of people organized into categories, has created a directory of Trading Twitter Firms/Users that numbers 1,322 firms with the top 25 claiming well over 1,000,000 followers.

@AdvisorTweets is a Twitter site dedicated to “What are U.S.-based financial advisors, including certified financial planners (CFPs) and RIAs, thinking?” In 140-characters or less the 573 members of this site exchange ideas instantaneously.

What’s obvious is today’s wired world is about content.  The very audience being targeted by traders and advisors has a voracious appetite for content.

Social media content in and of it’s self is content.  Social media content when put into context is extremely valuable.   Social media content put into context and aggregated creates a competitive advantage that can power your brand to the next level and beyond.

What traders and advisors are missing is that to be active, to be heard, to be found, to be a thought leader doesn’t mean you have to create all the content by yourself – that’s where twitter comes in.

How then can traders and advisors leverage the content twitter delivers throughout the day, put it into context, aggregate it and deliver it to their clients in their own voice?

The first step is to get a copy of Twitter’s new guide “Twitter for Newsrooms”.   The guide, titled “Twitter for Newsrooms,” is a little bit obvious for anyone who uses Twitter on a daily basis.  But the fact that Twitter has launched an official guid e for journalists is indicative of the impact of social media on the news.

Next, you will need to identify a social media archiving solution provider.  Your provider decision should take into consideration their ability to provide monitoring, market intelligence, and research in addition to satisfying compliance needs.

At a minimum your provider should:

• Allow you to customize your Twitter experience with groups, columns, saved searches and automatic updates on topics and people you are following.  Being able to track what others are saying about you, give updates via tweeting, and to share photos, videos and links from a single dashboard is a must for convenience and efficiency.
• Allow for the archiving of Facebook, LinkedIn and Twitter.
• Allow for RSS integration for archiving blogs, blog comments and a wide number of other social and web destinations used for monitoring and archiving.
• Allow you to leverage discovery tools such as StumbleUpon.  Discovery tools allow you to find fresh content and to share your content that you might not find on your own.
• Provide a dashboard allowing you to easily and conveniently monitor and launch your communications

These features allow you to conveniently listen, converse, share your voice, understand your customers, gather feedback and engage a large audience in a more personal manner. By selecting a provider that is able to offer content management workflow for web and social content, analytics to measure results, while preserving compliance, satisfies the need for data aggregation and enhances your return on investment.In part three of our selecting a social media provider series we will discuss the fifth twitter “C”, connectivity and introduce a sixth “C” – conversion.

A look at the traders office of the future and how financial advisors may begin to communicate with their clients: http://reut.rs/kniuEr

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

Today, with more and more firms evaluating and entering into social media, it stands to reason that FINRA & SEC rules governing social media and archiving solutions will play a bigger role in the professional lives of Financial Advisors and Advisors. In fact, you may be feeling enormous pressure right now to begin leveraging social media in your practice. That’s because an increasing number of clients are demanding that their financial advisors communicate with them through some form of social media—and it is, after all, a client’s prerogative as to how they’d like to receive their communications.

That said, when you’re enlisting the services of a social media archiving provider, there are five essential questions you must ask. These questions will let you know whether the provider offers all the “must haves” that are necessary to do the job right.

1. Can the provider archive, supervise and make communications discoverable?

Of course, by now advisors understand that the definitive source of FINRA guidance on Social Media Web Sites is Regulatory Notice 10-06, published in January 2010.  In this document, FINRA made it clear that online communications, including of Twitter, Facebook and LinkedIn, are the same as traditional written communications.  Meaning, the appropriate action for this content is that it needs to be archived, supervised and made discoverable.

2. What about the provider’s pre-review and approval capabilities?

Regulatory Notice 10-06 also provided guidance on:

• Websites – considered advertisements
• Communications sent to 25 or more prospective customers – sales literature
• Password-protected websites – sales literature
• Chat room discussions – public appearances

Additionally, there are NASD Rule 3010, which addresses a firm’s supervisory obligation to review correspondence; and NASD Rule 2210, which addresses a firm’s advertisement pre-review and approval obligations.

In order to satisfy these rules, archiving providers have developed several solutions that are currently available in the marketplace. You’ll find that most archiving providers offer these solutions, and can effectively assist FINRA-regulated clients in meeting their supervisory obligations to review correspondence under NASD Rule 3010.

3. Does the provider have hold and release functionality?

Furthermore, most of the available solutions have built-in hold and release functionality for the social media accounts of associated persons who are already set-up in your system. This capability enables your business to meet its advertisement pre-review and approval obligation under NASD Rule 2210 (b). Make sure your provider is up to speed.

4. Do they have surveillance and retention of data capabilities?

There has been a lot of discussion lately around two elements—surveillance and retention of data.  Today’s solution providers have built product features that act as surveillance tools, monitoring any use of an associated person’s social media accounts wherever the account is accessed.  These features are a “must have” if your firm wants the ability to identify non-compliance via activities that are prohibited in their social media policy. For example, what about unapproved updates to profiles or recommendations (testimonials) on LinkedIn sites that have occurred outside of the broker/dealer’s distributed technology? Surveillance and retention are essential if you are to prevent regulatory “surprises”.

5. Can providers handle the specific demands put on RIAs?

RIAs have their own set of regulations, SEC Rule 17a-4, that have requirements for indexing, time stamping and verification functionality.  Solutions providers are aware of these rules and have solution sets in place to accommodate them.

With these five “must haves,” it’s important to note that the most compelling fact is not that archiving solutions enable firms to monitor activity that is prohibited. Rather, it’s the fact that these solutions enable FAs and Advisors to empower their businesses to leverage social media. The shift is on; it’s a move from a reactive, prohibition-based environment to one that is proactive and consultative to your customers.

Through this new set of lenses, it’s possible for your business to construct a meaningful social media policy; design strategies and tactics that advocate your brand; and enable you to engage with customers, peers and prospects. These actions result not only in building new awareness for your brand and business, but also in extending and constructing new relationships as well as new revenue opportunities.

Social media is here and not just a fad.  Using the appropriate social media archiving solutions can bring the power of “social” to the forefront of your business.

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

Just as the Internet and e-mail have become ubiquitous over the past 15 years, social media will be the same, only faster. It will weave its way into the fabric of the asset and wealth management business and influence heavily how firms communicate with advisors and end-investors alike. Why? These investors will demand it.

At this point though, formal social media strategies are few and far between in the industry. If you are one of a handful of firms that has headcount and a budget for social media, you are considered a pioneer.  You’ve followed a path similar to the one outlined by Singapore based PR firm GetIt Comms in the attached graphic.

For managers seeking to make small but steady inroads into this market, we think the best place to start is with millennial investors, also know as Generation Y. This is a group that most industry firms overlook in their marketing efforts, which tend to over emphasize the baby boomers. Since many firms lack a Generation Y marketing strategy, it makes senses to roll any new campaign into a broader new social media strategy. Why does this demographic deserve this attention? Well, the numbers speak for themselves.

These millennial investors will inherit up to an estimated $40 trillion from their boomer parents, according to Boston College, and will eventually comprise approximately 29% of the U.S. population. Known as “digital natives,” this generation is expected to communicate more via social networking sites than e-mail in the near future – many  millennial investors do so now.

Remember that you don’t place a phone call to this generation if you want to connect, you text. Google is their main source of answers to their questions and everything is fair game to be posted on Facebook or YouTube.

When crafting social media content for Generation Y, asset and wealth managers  should consider the millennial investor’s preferences by being straightforward, transparent and consistent with their communications. Managers with interactive websites that assist the advisor and investor in understanding their investment process have an advantage. Firms also need to focus on delivering their message across the spectrum of various social networking sites. Remember these advisors and clients now go anywhere and everywhere to gather the information they need to make an informed investment decision.

But the importance of a social media strategy goes beyond millennial investors. The baby boomers are increasingly joining the ranks of Facebook users. Even grandparents are becoming members of Skype, which is very social media friendly. Additionally, changing market forces make it more important for asset and wealth managers to consider formal social media strategies. These factors include:

• A decline in the trust of financial services firms. The viral nature of social media increases the speed in which a brand can be subject to public criticism. In a world where the words “ethical” and “trustworthy” are the attributes in managers that advisors list as most important, it makes sense to have a proactive approach to communicating the firm’s message on social media pages. All managers should practice transparency and candor in all of their communications on these sites.

• Social media will bring business to managers. Social Networking provides advisors and their clients the ability to instantly tap into large sources of data and to hear direct recommendations about investment products from their peers. In this environment, managers need to be assertive in identifying their value proposition to investors.

• Direct communication through social networking sites. The ability to engage colleagues, peers and complete strangers is becoming easier more accepted. It will allow advisors and their customers to maintain and engage with a much larger peer group in the future. Firms should be developing strategies on how to communicate directly to these clients and prospects through social media sites.

Overall,  managers that grasp the nuances of this newly emerging target audience and design communication strategies that include their preferences will capture their share of this market.  Those that don’t will compete for a shrinking piece of the pie as the more competitive players fine tune their strategies and take a larger piece of the investable dollar pool.

That is the title of financial services research firm Corporate Insights update to their 2008 study on the topic of social media in financial services.

The attached video interviews Alan Maginn, Senior Analyst, Consulting Services and asks him to answer these four questions:

• How are financial services firms using social media?

• How are financial services firms handling customer service in regards to social media?

• How are financial services firms using Twitter?

• How are financial services firms using Facebook to interact with clients and prospects?

While I appreciate Alan’s comments, and they are appropriate, he may have overlooked the widespread adoption and use of social media by mid- to small-sized asset managers and the robust adoption and use of social media in the RIA and Independent Financial Advisor space.  At DBJ Associates we have seen a tremendous curiosity and adoption of social media by our clients over the past two years, a trend that shows no sign of abating.  In fairness, I have not read the Corporate Insights (www.corporateinsights.com) 300-page study where in fact this might be discussed.

I would welcome your comments.

Discover how to complement your lead generation efforts with social media’s powerful contact capture techniques

Join us tomorrow on the BrightTalk channel at 1pm EST


Easy-to-use, low-cost social media programs are helping smaller fund managers and advisors stand out in a crowded market.

Advisolocity’s John Drachman and Zach Hedges open their social media case book tomorrow to show you how increasing numbers of investment professionals are putting the Internet to work by establishing fresh thought leadership themes, expanding their presence and measuring the results.

Join us at BrightTalk to reserve your place, August 24, 2010 at 1pm EST.  Please cut and paste to your browser: http://academy.brighttalk.com/best-practices/where-social-media-meets-client-acquisition.html

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.

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.

“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.

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.

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.

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.