The Socially Savvy Advisor - Jennifer Openshaw - ebook

The Socially Savvy Advisor ebook

Jennifer Openshaw

219,99 zł


The social media marketing bible for the financial industry The Socially Savvy Advisor: Compliant Social Media for theFinancial Industry is the complete guide to creating aneffective social media strategy without breaking the big rules.Written by an industry specialist Jennifer Openshaw, alongsideStuart Fross, Fidelity International's former general counsel, andAmy McIlwain, president of Financial Social Media, this book mergesmarketing basics with FINRA and SEC guidelines to help readerscreate an effective social media campaign specifically for thefinance and investing world. Contributions from industry leaders atCharles Schwab, Citibank, and others provide inside perspective andexperience so readers can tap into a new audience. With a focus oncompliance, the book clears common hurdles while dispelling mythsand outlining effective methods and techniques. Readers also gainaccess to a website featuring videos, Q & As, tutorials,Slideshare, and a social media policy template. Social media is one of the hottest topics in finance. From solopractitioners to large asset managers, everyone's consumed by how,when, and where to use this new and powerful medium--butguidance is hard to find. The Socially Savvy Advisor coversthe entire issue, from platform, to content, to what not todo. * Best practices in using social media for advisors andcompliance officers * Planning for the regulators, vs. failing to plan * Challenges with LinkedIn, Facebook, Twitter and other socialplatforms * Elements of a good social media policy * Managing the top issues related to marketing and businessdevelopment, engagement, and compliance With the right plan and the proper technique, social mediamarketing can dramatically improve client outreach and retention.The Socially Savvy Advisor provides the expert insight,tools, and guidance that shape a robust, effective strategy.

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Title Page






Part One: The New Business Environment

Chapter 1: How Is Social Media Changing Investor Behavior?

How Investors Are Getting Social

Investors Are Demanding More with Transparency and Real-Time Access

What Investors Really Want: Find Their Advisors on Social Media

Chapter 2: What Are Social Media's Implications for the Financial Industry?

Sitting Out the Game?

Financial Advisory World in Flux

Four Obstacles to Greater Social Media Engagement

What Does This Mean For the Industry, CEOs, CCOs, and Marketers?

What the Future Holds

Chapter 3: What Are the Tensions Between Social Media and Regulation?

Three Reasons Why Advisors Feel Regulators Make Social Media Difficult

What Regulators Could Do to Make Social Media Easier

A Defense: Policies in Place

The Real Barrier: Regulators or Industry?

Some Final Thoughts

Chapter 4: Are the Risks of Using Social Media Worth the Benefits?

Social Media'S Shifting Winds in Financial Advisory

Four Social Media Risks and Solutions

Chapter 5: How Will Social Media Change Our Industry in 10 Years?

Get Ready: More Change Is Coming

A 10-Year Look: How the Financial Industry Will Change

Eight Predictions for the Next Decade

Chapter 6: What Are the Biggest Social Media Myths?

Part Two: The Regulatory Environment

Chapter 7: What Are the Top Challenges Compliance Officers Face?

What CCOs Should Know

Five Key CCO Challenges

When to Call For Help

Chapter 8: What Does FINRA Say about Social Media?

Three New Areas of Finra Guidance

Choosing Your Content: Static Versus Interactive

A Finra Sweep of Advisor Practices

New Cybersecurity Initiative

Chapter 9: What Does the SEC Say about Social Media?

Seven New Guidelines That CCOs Should Know

Testing for Testimonials

A Looser Interpretation

Three Clarifications on Earlier Guidance

Chapter 10: What Gets Financial Professionals into Trouble with Social Media?

Remember The Ground Rules

Remember: There's Risk

Drawing Lines Between Business and Personal

Four Ways to Manage Social Media Risk

Keys to Handling Bad Content

Chapter 11: How Do We Create a Social Media Policy?

Five Steps to Starting Your Policy

Five Policy Elements the Sec Likes to See

The Three “Ss” of A Social Media Policy

Part Three: Key Playing Fields in Social Media

Chapter 12: How Can We Use LinkedIn?

First, What Exactly is Linkedin?

Why is Linkedin Different From Other Social Networks?

Three Steps to Getting Started on Linkedin

The Problematic Endorse Function

Chapter 13: How Can We Use Facebook?

Seven Ways to Start on Facebook

Chapter 14: How Can We Use Twitter?

Twitter in Financial Services

How to Get Started With Twitter

What to Tweet

What Not to Tweet

Chapter 15: How Can We Use YouTube?

Six Tips for Staying Compliant on Youtube

Eight Ways Financial Professionals are Using Video

Six Steps to Getting Started With Video

Case Study: Matson Money

Chapter 16: How Can We Use Google+?

Chapter 17: What Other Social Media Platforms Can Professionals Use?






Part Four: Marketing and Business Development

Chapter 18: How Do We Decide Which Social Media Platforms to Use?

Three Questions to Ask…And it all Starts With Compliance

A Case: Choosing the Right Platforms

Three Steps to Choosing the Right Social Media Platforms

Chapter 19: How Do We Integrate Social Media with Overall Marketing?

The Challenges of Unifying Social Media with Overall Marketing

Two Approaches to Incorporating Social Media into Marketing

The New Model: Getting Your Firm Behind a Social Media Program

Three Social Media Elements of Marketing

Putnam Retail: Asset Manager Moving from Traditional to Digital Media

A Small Advisor and His Big-Time Marketing Plan

Five Ways to Give Social Media Legs to Your Marketing Efforts

Chapter 20: How Do We Measure Social Media ROI?

Defining Success With Roi and Kpi

Three Strategies to Measuring Your Social Media Roi

Chapter 21: What Types of Content Work Best?

The Benefits of Content Marketing

Six Steps to Successful Content Marketing

Chapter 22: How Do We Use SEO to Reach Key Audiences?

Three Ways SEO is Changing Right Now

A Case Study: Heron Financial Group

Top Mistakes the Financial Industry Makes

Five Keys to Building Seo-Friendly Content

Multiple Offices? How a Firm or Advisor Can Reach Locally Via SEO

When to Hire Help

Chapter 23: How Can We Leverage Paid Social Media Promotions?

Why Paid Promotions May be Beneficial

Steps Toward Starting Your Paid Social Media Campaign

Network-Specific Advice

Chapter 24: How Do We Avoid Copyright Problems?

Mastering the Rules of Fair Use

Standards for Using Photos and Graphics

Chapter 25: How Do We Track and Defend Our Reputation on Social Media?

Key Methods to Manage and Enhance Your Web Presence

Duking it Out in the Social World

Chapter 26: How Can We Use Social Media to Promote Our Events?

Create a Shareable Story

How to Find Influencers

Influencers: A New Mindset

It's Not Just About Text

Promoting Your Events Via Social Media

Chapter 27: Do We Need a Social Media Manager?

So What Does a Social Media Manager Do?

How Can Advisors and Asset Managers Further Benefit from Hiring a Social Media Manager?

How Do I Know if I Should Hire Someone to Manage My Social Media?

What Should Advisors or Asset Management Firms Look for in a Good Social Media Manager?

Part Five: Client Servicing

Chapter 28: How Can Social Media Be Used to Save Time and Money in Servicing Clients?

Four Facts to Know

Overcoming Challenges in the Financial Industry

Schwab: A Closer Look

Can Social Care Help You Save Time and Money?

Five Key Steps to Setting up Client Servicing on Social Media

Chapter 29: How Can We Use Social Media to Create Client Groups?

The Biggest Marketing Misunderstanding About Social Media

Five Steps to Creating Social Media Groups

Party Venues: Linkedin, Facebook, Twitter

Best Practices with Groups

Chapter 30: How Do We Prevent Competitors from Poaching Our Clients on Social Media?

Three Ways to Protect Yourself from Poaching

Clues to Tip You off to Poachers

Leaving on Good Terms—And Getting Your Client Back?

Part Six: Managing Social Media Compliantly

Chapter 31: What Are the Investor-Protection Rules as They Relate to Social Media?

Four Services That Draw Sec Attention

Recurring Problems in Sec Examinations

Chapter 32: How Can We Comply with Making Securities Recommendations Through Social Media?

The Trouble with Recommendations

Solving the Suitability Problem in Social Media

An Advisor's Responsibility for Blog Recommendations

Five Things Advisors Should Know When Making Recommendations

Chapter 33: How Can We Pre-Approve Content?

What's Driving the Shift Away from Pre-Approved Content?

The Risks of Pre-Approving Content

A Stepping Stone: The Pros of Pre-Approving

Raymond James' Social Evolution

Approaches to Pre-Approved Content

A Next Step: Education

Chapter 34: How Can We Comply with Rules Related to Testimonials, Endorsements, and Advertising?

Hating the Like Button

Overseeing What's Said on Social Media

Five Conversations That Don't Require Filing

Two Conversation Topics That Advisorsmust File

Chapter 35: How Can We Spot-Check Employee Behavior on Social Media?

Business Use of Personal Websites

The Regulators are Searching on Social Media

Chapter 36: What Cybersecurity Mistakes Should Advisors Avoid?

What Criminals Gain and Consumers Lose

Implications for Advisors and Organizations

A Closer Look at the Risks

What Finra and the SEC Say

Not Hip to Hackers? Three Risks for Advisors

Key Moves to Ward off Risks

Other Social Media Protection Tips

The Future of Cybersecurity

Chapter 37: How Does the JOBS Act Impact Social Media and Hedge Funds?

Who Wants to Buy a Placement?

A Tech Upgrade for Private Investment

Chapter 38: How Will Social Media Change the Role of the CCO in the Years Ahead?

Three Areas of Change for CCOs

A Rising Tide of Costs

A Changing Role for CCOs

Appendix Sample Social Media Policy

About the Author

About the Contributors

About the Companion Website


End User License Agreement

List of Illustrations

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Table of Contents

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Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

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The Socially Savvy Advisor

Compliant Social Media for the Financial Industry

Jennifer Openshaw

withStuart Fross andAmy McIlwain

Cover image: top: ©; bottom: © Belomlinsky

Cover design: Wiley

Copyright © 2015 by Jennifer Openshaw. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at

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Library of Congress Cataloging-in-Publication Data:

Openshaw, Jennifer.

The socially savvy advisor: compliant social media for the financial industry / Jennifer Openshaw, with Stuart Fross and Jerry Gleeson.

pages cm. – (Wiley finance series)

Includes index.

ISBN 978-1-118-95907-7 (cloth/website); ISBN 978-1-118-95910-7 (ebk);

ISBN 978-1-118-95908-4 (ePub) 1. Financial services industry. 2. Investment advisors. 3. Social media. I. Title.

HG173.O645 2015




Dedicated . . .

To every investor who seeks financial security, and to everyfinancial advisor who struggles in a rapidly changingworld to make those investors' goals a reality.


The world as you know it is being reshaped!

This statement couldn't be more descriptive of the Financial Services industry and the world of wealth management. Leadership teams around the globe are grappling with the rapid adoption of, increasing reliance on and relationship dynamics fueled by social platforms.

Facts called out in The Socially Savvy Advisor may have bordered on blasphemy in board rooms years ago. However, as author Jennifer Openshaw clearly points out, these behaviors are setting new rules of engagement. We live in a world where:

Fifty percent of investors…rely heavily on financial websites and blogs, ahead of financial newspapers and financial planners.

—ING Direct

Seventy percent of wealthy investors have restructured their investments…based on content found on social media.

—Cogent Mass Affluent 2014

Among “Under 40” HNWI, 40.5 percent cite social media as importance for accessing information and 36.3 percent for engaging with wealth managers and firms.

—RBC Wealth Management/CapGemini World Wealth Report 2014)

And these are changes I've seen firsthand. I have spent the past 15 years focused on digital technologies that disrupt, enhance, and create value for clients as they navigate their intricate relationships with financial institutions.

Having joined LinkedIn in early 2011 as Global Head of Category Development–Financial Services, I've watched the LinkedIn network grow threefold to over 313 million members today. Within this vast network, the Financial Services industry has seen tremendous traction. In fact, the Financial Advisors Group is one of our fastest-growing communities, with more than 700,000 members globally. These members are actively leveraging LinkedIn to build their professional brands, grow their businesses, and, as a knowledge platform, to access industry news, market perspectives, and peer insights.

This rapid uptake presents financial services firms and those selling to them with tremendous opportunities to engage and interact with prospective clients. But there are right and wrong ways to go about this.

The Socially Savvy Advisor is a comprehensive guide to our social ecosystem and regulatory landscape. It provides pragmatic advice and how-to tips that can transform your social marketing efforts from being a tangential business strategy to a decisive game changer.

A concise and digestible read, this book is suitable for advisors at all stages of the “social practice” continuum. In it, you will find:

Compelling stats and consumer insights.

Use cases of social platforms, successful marketing practices, and a getting-started checklist.

Overview of regulatory rules and a compliance planning guide.

Best practices for content creation, content distribution and migrating to an “always-on” content strategy.

Standards related to marketing and business development.

So read on for clear guidance when it comes to tapping into this new opportunity without breaking the rules.

Jennifer Grazel

Global Head of Category Development

Financial Services



You've heard it before: it takes a village. But you know it's true when we're talking about compliant social media for the financial industry!

Numerous industry leaders and experts shared their invaluable time and insights, and for that I'm especially grateful. They include Melissa Callison, vice president of communications compliance, Charles Schwab; Michael Kitces, author of Nerd's Eye View; Blane Warrene, co-founder of Arkovi; Renee Brown, senior vice president and director of social media at Wells Fargo; Edward McNicholas, partner at Sidley Austin; Dan Schreck, head of investor relations at Equinox Partners; Tina Petruzziello and David Rozenson of Boston Compliance Associates; Marie Swift, CEO of Impact Communications; Barbara Stettner, managing partner of Allen & Overy; Frank Eliason, director of global social media at Citibank; Sunayna Tuteja, director, social business & e-commerce at TD Ameritrade; Frank Gosch, senior director of search and analytics at Hearst; Lindsay Tiles, managing director of social media at Charles Schwab; Mike White, chief marketing officer at Raymond James; Melissa Sochi, SVP of brand & marketing delivery at LPL Financial; April Rudin, founder of Rudin Marketing; Brittney Castro, founder of Financially Wise Women; and Bill Winterberg, CFP® and founder of FPPad. You all bring tremendous energy and foresight.

I'm grateful to the Wiley team, especially Tula Batanchiev, for immediately seeing the tremendous need for this book. Judy Howarth, thank you for your valuable production guidance.

Stuart Fross, partner at Foley & Lardner, a gifted attorney and dear friend, and Amy McIlwain, president of Financial Social Media, were both invaluable contributors. You've enriched this guide with your expertise.

Two people—among the most dedicated I've ever met—deserve special applause. Marketing Manager Sherry Chen brought her usual perfection to the images and examples in the book, and Jerry Gleeson, one of the most gifted editors in financial journalism, imparted his years of wisdom and breathed life into my words.

Finally, to my family—husband Randy and daughters Gianna and Elizabeth—you are my village of support and sage advice on the homefront. When I walked through the door and shared the delight at nearly completing the book, you were just as excited.

“Where's the book, Mommy?” asked 4-year-old Gianna. “Can I see it?”

“It's not ready yet, honey,” I said. “But you can help me choose the cover.”

“Okay!” she said with glee.

I showed her the four options that the publisher had sent over. After just a few moments, she pointed confidently at one…and I knew it was the right choice.


Nicky Gumbel arrived early at his kid's soccer game. Realizing the regular referee was late and no other dads were around, he decided to step in.

Nothing was set up—no cones, no nets, no markings for the boundaries. Gumbel wasn't a soccer player himself and knew little about the rules. But he thought, What the heck, let's get the kids on the field and start kicking the ball.

The problems started early and quickly escalated.

“Some shouted that the ball was in. Others said it was out. I wasn't at all sure, so I let things run,” Gumbel recalled. “The game soon descended into complete chaos.”

Kids were getting hurt and arguing over purported fouls, but Gumbel couldn't tell who was right or how to resolve the disarray.

Then Andy, the regular referee, appeared on the scene. “The moment Andy arrived, he blew his whistle, arranged the teams, told them where the boundaries were, and had them under control,” Gumbel said. “Then the boys had the time of their lives!”

What does this have to do with social media in the financial industry?

Advisors frequently chafe against the restrictions that compliance places on them. That's become more acute in recent years, as people in the industry explore the bounds of what works and what doesn't in the new world of social media.

Yet limits—whether on the soccer field or in the financial social media world—actually create a framework. They allow us to operate within the cones and spawn a game with purpose and excitement. Without limits, we're not really free to enjoy the game, or our work.

Imagine you're an asset manager or an advisor at a bank or wealth management firm. You or your colleagues are on social media, conversing about whatever comes to mind, engaging with whomever—on Twitter, LinkedIn, or Facebook.

You know how conversations can get sometimes at the office water cooler or restroom? It's easy to toss off some uncensored bon mot, share a quick laugh, and head back to your desk. Well, people are doing that on social media, and the outcomes aren't always pretty. In fact, as you'll see in this book, the professional damage can be substantial.

The point is: without structure, there's chaos. Advisors and firms, and certainly compliance officers, need a sense of orderliness and oversight. The end investor does, too, for his own protection.

Hopefully, I bring a little perspective. In the early Internet days of 1999, I left a large investment advisory firm to head up to Silicon Valley. It was there that I launched Women's Financial Network, an online brokerage, content, and advisor network venture focused on this growing market. It was the Gold Rush of online action, and we were leading the way, with 1,000 women signing up for our service each day. Since then, I've advised and worked for many firms and nonprofits, trying to bring a consumer-focused experience that leverages the technologies of the day.

Leap forward 10 years, and today that milieu is social media. We are in Web 3.0, where business relationships can be built—and brands ruined—with a handful of keystrokes.

There's danger for investors, too. Unscrupulous individuals can now reach thousands, if not millions, of people to tout some dangerous investment or maybe even attempt to access their personal financial information.

Do we need structure? You bet. Not just to protect our business, but to enable you—the advisor or the firm—to operate freely and successfully.

The insights and guidance you're about to glean from this book come largely from my work over the past three years with more than 300 firms—from small registered investment advisers (RIAs) and banks and wealth management divisions to hedge funds, mutual funds, and other asset managers.

Some time ago, the leaders at LinkedIn approached me about joining their Influencer program—a chance for accomplished professionals in various industries to write about issues from their perspectives. I held off at first because I was preoccupied with my job and my column at MarketWatch, but curiosity about writing on a new social media platform led me to try it out. The experience with my first column astonished me: Every hour I checked in, the views would go up by a thousand. I found myself replying to some of the comments, which produced more comments. Overall, the story generated more than 100,000 views and 400 comments—four times what many articles in traditional online channels generate.

As impressed as I was by that, I understand that many people still have questions about what social media means for them. Indeed, even as this book was going to press, a new study by Gallup questioned social media's impact—62 percent of consumers surveyed by the firm said social media had no influence on their buying decisions.

Clearly, social media is in its infancy, especially in our industry. There's still a great deal of debate over things like return on investment (ROI), but my goal here is to at least provide you with the rules of the game and some insights as to how others—advisors, managers, and even associations in our industry—are playing on the field.

I know you don't have much time, and that's why this book is designed to answer the biggest questions you ponder over every day when it comes to using social media. You'll find lots of specific guidance and how-tos, along with compelling visuals to illustrate how you might move forward.

We are at an exciting time in our industry—where technology, regulations, and investing are creating the perfect storm for change. Sure, we may have been slow to adopt social media, but the opportunity to change the financial landscape and continue to serve as the world's pre-eminent financial center remains in our hands.

Join me in continuing the innovation on behalf of investors.

Part OneThe New Business Environment

Chapter 1How Is Social Media Changing Investor Behavior?

You remember that small innovation called e-mail? It changed everything from how we behaved to how we managed our workloads.

In e-mail's early days, many compliance officers insisted, “We'll never adopt this.” But soon enough, e-mail became a part of their daily lives. Compliance officers and marketers were forced to embrace it as the rest of the world did, leading them to invent new policies and procedures in order to remain compliant with regulators.

Imagine where your business would be today if you hadn't adapted to e-mail. The service is such a part of the landscape that nobody bothers to give it much more than a second thought. That's how it is with transformative technology—it upends the market, the market adapts, and its use is taken for granted.

Now fast-forward another two decades or so, and have a look at the latest game-changer: social media. Today, it's a New Tech World Order, as I call it. Our society has never seen anything like it; information can be sent in nanoseconds and shared in ways that are empowering people and upending traditional ways of doing business. In the financial world, that can be information shared between investors, from a company to investors, or vice versa.

For you or your business, that dynamic can be both a blessing and a curse. The blessing, for those who embrace it, includes getting out of the starting gate early as the market evolves. The curse is the uncertainty of the new—Am I doing this right? How do I prepare for risks I don't fully understand right now?

One way to understand what social media means in the New Tech World Order is to look more closely at how it's affecting the lives of the clients on whom the financial industry depends.

How Investors Are Getting Social

First, let's take a look at how today's investors are behaving. They are using the online, social world to engage in five key ways:


—Connecting with others like them. You're familiar with online gatherings around a profession. Even the old-fashioned investment club is more active online, with greater access to tools and content for more efficient exchanges. Consumers are increasingly gathering with those like them, whether it's to engage in impact investing, to encourage more women to move into our industry, or to call for a greener world. Yes, the online world now makes niche convening with people truly “like me” more possible than ever before.


—Thanks to the new federal Jumpstart Our Business Startups Act, firms and investors are increasingly sharing information and investment opportunities. They're doing it through online investment sites that allow them to discover Warren Buffett's latest investment. Soon, they'll be accessing prospectuses of investment opportunities that previously were available only to sophisticated investors.


—You've wanted to react many times. To a bad product or service or a rude professional, or, on the flip side, a great experience. Now, imagine that reaction shared online, magnified by thousands if not millions. It's happening, especially through Facebook and Twitter, as we'll discuss in the coming pages.


—Perhaps the biggest surprise to some is the new ease with which overnight investment gurus can emerge. Many are springing up either with their own blogs, on sites like SeekingAlpha where professionals can share their investment insights, or on financial news sites and networks, from Dow Jones' MarketWatch to Motif, a consumer-oriented social investing platform.


—One of the greatest empowerment moves is the ability to help consumers make better decisions—from choosing restaurants to hiring a handyman—and protect them from bad actors. I was once asked if online networks will pose a greater threat to investors who might be prey to the next Bernie Madoff. Interestingly, in Europe, a social network for investors called Unience (sister to Finect in the U.S.) discovered that members actually acted quickly to protect fellow members from bad investment products or people. Just as one can instantly flag a spammer on Yelp, so too can they instantly call out a disreputable professional.

These behaviors aren't occurring in a vacuum. It should come as no surprise that they've helped shape the way investors approach financial advice and related services.

Investors Are Demanding More with Transparency and Real-Time Access

Starting just a few years ago—after the financial crisis, and as social media usage picked up—investors became increasingly drawn to the Internet as a source of investment advice. This was due in large part to a massive loss of trust in major U.S. banks. Nearly 50 percent of investors now rely heavily on financial websites and blogs—ahead of financial newspapers, periodicals, and financial planners—for their investment information (see Figure 1.1).

Figure 1.1 Sources of Investment Advice

Source: ING Direct USA's Sharebuilder Survey

It's clear that investors, especially younger ones, are actively engaged in the online world in other ways:

They're reallocating.

According to a survey conducted by Cogent Research of 4,000 investors with more than $100,000 in investable assets, nearly 70 percent of wealthy investors have restructured their investments, started, or altered relationships with investment providers, based on content found through social media.

They're researching electronically.

Just in the last few years, consumers have had more access to real-time information, from scrolling through Twitter on their smartphones to pulling out their iPad while at the gym. In fact, a Fidelity Investments survey found that two-thirds of the millionaires surveyed said they would like to use electronic media with their advisors. And young millionaires—those ages 44 and younger—are three times more likely than millionaires of all ages to select a financial professional through a website providing detailed information on advisors, according to Spectrem Group.

They're engaging online.

Young millionaires are four times more likely to express interest in a blog or tweets from their advisor, and nearly six times more likely to say they'd like their advisor to be on Facebook. “The overall percentages of young investors wishing to connect with advisors via social media remain small, but the differences in attitudes between young millionaires and millionaires of all ages are striking,” Spectrem Group says.

Indeed, investor involvement with social media will play out profoundly in the years ahead, with serious implications for advisors who fail to take the trend seriously.

What Investors Really Want: Find Their Advisors on Social Media

Think about it. Suppose an investor decided the time had come to begin working with a financial advisor. It's natural to start such a search on the Web. Would the investor be able to find your business on the Web? And if so, would he find the information on your site that he really wants to know?

It turns out this may be harder for the investor than you would think. In late 2013, a survey with investors uncovered some surprising findings (Figure 1.2). Nearly half of those surveyed want to connect with their financial advisors through social media, but they either cannot find advisors or they conclude the advisors don't operate through this online channel.

Figure 1.2 Investors' Preferences for Financial Advisors on Social Media

Source: Finect Inc.

The survey also found that those investors who do connect with their advisors through social media are generally satisfied with their interaction.

Among the key findings:

Investors age 44 or younger are more likely to connect with their advisors on social media than those over 45.

Emerging affluent investors (more than $100,000 to under $1 million in assets) use social media more than mainstream and high net-worth investors do.

Investors who connect with their advisors on social media tend to be satisfied with the level of access to their advisors.

Female investors are 11.5 percent more likely than male investors to connect with their advisors on social media.

Investors do not care about the details of their advisors' personal lives on social media—which is not to be confused with being personable.


most important

social media interaction with advisors, according to investors, is sharing trending investments or personal finance news.

The number of social media followers an advisor has is the

least important

feature for investors when choosing advisors through social media.

An advisor's availability to answer questions is the

most important

feature for investors when choosing advisors through social media.

The message is clear. Successful American industries have adapted when consumer preferences and behaviors change. Automobiles are safer to drive, restaurants serve healthier food, and home computers operate more quickly and with more sophisticated software. The financial industry now faces new demands from investors who are more empowered via social channels. As the survey underscores, younger investors already expect their advisors to interact with them in this medium. Clearly those advisors who do so will be the ones who thrive as the future inevitably closes in. The financial industry has adapted to paradigm shifts of this sort in the past, and will continue to do so. Advisors and other professionals who adapt to the trend will have a leg up on their competitors. What are you waiting for?

Chapter 2What Are Social Media's Implications for the Financial Industry?

At the end of Chapter 1, I alluded to examples of how different industries in the United States responded to changes in behavior by their customers—new safety features in automobiles, less sugar and salt in food, and so on. It also happens that many American industries also are au courant with developments in social media as well.

Whether it's fashion or food, they not only have embraced social media, they've incorporated it into their businesses or built online communities around niche markets. Think of Yelp or for locally rated restaurants or overnight stays. has refashioned retail, not only by making it easier for consumers to buy what they want, but also by tracking customer interests and using that data to suggest other products their clients might enjoy. Even in our personal lives, places like have, for nearly a decade, transformed the way consumers can find their life partner.

Sitting Out the Game?

And yet a good portion of the financial industry remains skeptical about this revolution. To be sure, there is a healthy and growing presence of financial advisors on professional networking site LinkedIn, yet participation in other key social media channels is still pretty thin. A 2013 survey by InvestmentNews showed that only one out of four advisors used Facebook, and participation in other channels was markedly lower.1

Industry experts say many firms are just tiptoeing into this new channel—testing tools to allow content distribution, piloting basic regulatory compliance through social media, and shaping their online voices. The goal is to build brand and awareness or increase engagement with investors, although many in the industry remain concerned about how strong the impact will be on revenue growth and the return on their investments (see Figure 2.1).

Figure 2.1 LinkedIn Leads Among Advisors

Source: InvestmentNews' Advisers & Social Media Survey 2013

And yet the pace is picking up, says Alan Maginn, an analyst at Corporate Insight, which follows developments in the retail financial services industry and conducted one of the industry's earliest studies on social media involvement.

“In 2008, there were just a few early adopters of social [media] in the financial industry,” he says. “Now, the ship has sailed: most financial firms who are going to be involved in some capacity are.…Those who do a good job are the ones that are able to effectively engage with their audience.”

Still, the difference between social experience by investors and that of advisors is striking; it's almost like comparing a go-cart race to the Indianapolis 500. For example, the Pew Research Center found in 2011 that 70 percent of millionaires use social media; of those investors, 46 percent used Facebook, nearly double the 26 percent in 2010.2 By comparison, a recent survey by TD Ameritrade found that more than 90 percent of advisors have a social media profile of some sort, but only 5 percent of their referrals come from social media.3

So the good news is the financial world is moving—gradually—into the social media universe. The problem is, their customers are already there in large numbers, numbers that are growing at a far greater pace than that of the financial industry itself (see Figure 2.2).

Figure 2.2 Advisor Talk as They Begin to Think Social

Source: Finect

Financial Advisory World in Flux

And yet, while some advisors are hesitant about going more deeply into social media, their world already is being reshaped.

Take the wirehouse channel, for example. These top-of-the-food-chain brokerages have long had established ecosystems in which information and services were organized and the roles of brokerage, advisor, and investor client were fairly clear. Wirehouses could dictate products and fee structures, and their advisors and clients would get in line (see Figure 2.3).

Figure 2.3 Traditional Wirehouse Ecosystem

But advisors increasingly are finding alternatives to toiling in the wirehouse world. They're moving toward independence, bolstered in their efforts by third-party providers of every service from technology needs to asset management. Indeed, the registered investment advisory channel alone grew from 34 percent of all financial industry advisors in 2007 to an expected 47 percent in 2013, according to the industry research firm Cerulli Associates.4

Through technology and social media, advisors are finding new communities and capabilities to build their business—capabilities that allow them to work with open architecture brokerage platforms that don't dictate what securities they must buy, for example. And there's change occurring at the bottom of the investor market as well. So-called robo-advisors—firms that offer automated financial advice to low-asset investors for cut-rate fees—are growing as demands grows for advice among the mass affluent and tech solutions proliferate in response (see Figure 2.4).

Figure 2.4 The New Ecosystem Provides Greater Access to Advisors and Investors

Source: Finect

This shift is presenting both new opportunities and challenges. Financial professionals and firms face increasing pressure to discover, market, and network more efficiently and cost-effectively. And while business growth and marketing remain top priorities, regulatory changes and compliance issues also rank among the top concerns weighing on leaders and advisors. As a result, more than half—63 percent—of all registered investment advisors say that investing in technology is far and away the top infrastructure investment they anticipate making over the next six months to accommodate business growth (see Figure 2.5).

Figure 2.5 Top Business Concerns among RIAs

Source: TD Ameritrade

And there's one other critical trend: the aging client base. We all talk about the generational wealth transfer—by some estimates totaling $41 trillion over 40 years—that is taking place. But have we thought about who, really, will be making those financial decisions—and how? By 2020, two-thirds of wealth is expected to be held by women. Already, the majority of women change advisors after the death of their spouses, according to LIMRA research (see Figure 2.6).

Figure 2.6 Top Industry Trends Pose a Challenge

Source: TD Ameritrade

And how are these busy women juggling work, family, and elderly parents? By going online and using their mobile devices. Yes, women continue to rely on the Internet more than men—a trend we saw in the early Internet days—and with new hubs and networks now at their fingertips, social media is the way to connect and engage with them.

So it's a changing world, both for investors and the advisors they work with. Social media clearly will accelerate the pace of that change in the years ahead. And yet, in many ways advisors feel held back in the social world (see Figure 2.7).

Figure 2.7 Asset Managers Talk about Going Social

Source: Finect

Four Obstacles to Greater Social Media Engagement

While social media use is practiced widely by Americans, many people simply avoid it. Some find the platforms unfamiliar or counterintuitive, while others see little value in sharing and engaging on the Web. Among financial professionals, however, the reasons for avoidance tend toward the technical and the specific. To look at why many in the industry feel held back in social media, let me just briefly touch on the “Four Multiples”:

Multiple Platforms

—Facebook, LinkedIn, and Twitter all have growing value for our industry, depending on how those platforms are used. But if marketers are just now learning how to use these platforms, how can we expect compliance officers to also understand? Moreover, focusing on any one platform could be nearly a full-time job by itself.

Multiple Employees

—If you have multiple employees on multiple platforms—or even one platform—how do you track and monitor them? It's enough to make you stop right there: Is it worth the risk to your compliance record? “Let's see how others do” is a common mode of action.

Multiple Regulations

—Let's not forget the regulators. And this is problem one for many in the industry. You might be overseen by Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), or even the Office of the Comptroller of the Currency (OCC). How do you cope with all of those requirements for approvals, archives, recordkeeping, and more? Of course, no professional concerned about his or her job would want to do anything until they get some green light from officials that it's okay to use social media. But as we'll discuss later, that's one of the common myths. The good news is that regulators seem to be moving more quickly as they, too, embrace social media for their own purposes.

Multiple Internal Layers

—Thanks to regulations and legacy bureaucracy, particularly at large firms, many organizations have multiple approval layers. It takes time to work through those layers, not to mention instituting new policies to abide by regulatory requirements.

What Does This Mean For the Industry, CEOs, CCOs, and Marketers?

Obstacles to social media adoption are real in the financial industry, but that hasn't frozen its professionals in their tracks. In the last year alone, we've seen major brokerages like Raymond James and Morgan Stanley, top asset management firms like BlackRock and Putnam Investments, and one-man financial advisors and everything in between begin to adopt social media in some way.

It's a channel that can't be ignored. Whether your clients are retail investors or financial advisors, firms are recognizing they have to figure out social media. Marketers are partnering with compliance officers to increase their understanding and ensure the right processes are in place. Many firms are using social media at two levels: the corporate level, for building the company's brand and leveraging content; and the individual employee or advisor level, helping them build their individual brand and customer base.

Here's how it breaks down across the different advisory channels:


—Many brokerage firms have taken some initial steps toward embracing social media. For example, Cambridge Investment Research, with some 2,400 advisors on social media, permits them to post on Twitter, LinkedIn, and Facebook, subject to a post-use review. Others, such as Commonwealth Financial, prohibit product recommendations. The majority of Commonwealth's 1,400 advisors operate on at least one social media platform. At LPL Financial, more than 5,000 of their advisors operate on some platform: 36 percent on LinkedIn, 10 percent on Facebook, and about 6 percent on Twitter, former Chief Marketing Officer Joan Koury says. LPL advisors are required to get pre-approval for YouTube videos but, other than that, only static content needs to be approved.

Asset Managers

—Asset managers' use of social media truly depends on their audience. I recall meeting with a top consultant to the John Paulsons of the world who said: “They'll never be on social media. They prefer to keep private and operate with their own closed networks.” But other asset managers are embracing social media—indeed, they view it as a more efficient way to distribute education, research, and other content more efficiently. “It's easier than going here to Schwab and there to Fidelity to post our content,” one CMO told me. For now, CMOs and even CEOs at asset management firms tend to view it as an opportunity to build their brand and compete, for the first time ever, against larger, more established firms. As new consumer-oriented hedge funds are developed, we expect that they, too, will embrace social media.

Independent Financial Advisors

—Independent financial advisors have an easier time: Many are essentially their own compliance officers. That means no approvals and a more timely ability to get in on trending news or react to a client or prospect. Take financial advisor Jim Ludwick, CFP, formerly with Bank of America and now running Mainstreet Financial Planning. He's tweeting regularly and sending summaries of his top personal finance tweets to his followers. Or Winnie Sun, of Sun Group Wealth Partners, who reports how she's strongly built her client base through social media and snagged a $31 million client through LinkedIn. Indeed, Putnam found that some 29 percent of advisors had acquired a client with more than $1 million in assets via social media.

What the Future Holds

Clearly, different segments of the financial industry demonstrate wide differences in the degree to which they are embracing social media. But the involvement of individual advisors or firms will depend to a great extent on their ability to adapt to some of the changes already under way. As you or your firm look to use social media, what are some of the key things to watch for?

More communications to record

—Whether you're a compliance officer or technology leader, you'll have to address the massive amounts of content that may require approval and will certainly require archiving.