| NEW YORK, March 1
NEW YORK, March 1 When many financial advisers
ask their firms about fully engaging in social media, the answer
is usually still a resolute "no" - to Twitter, Facebook,
LinkedIn, Tumblr, Pinterest, blogging and just about
Only a few of the major financial firms, including Morgan
Stanley Wealth Management, have started pilot programs to
give their financial advisers access to social media, because
each interaction has to be monitored by a compliance system to
make sure advisers are abiding by regulations.
Advisers themselves aren't convinced that there's enough
value for their practices in using social media. Only 19 percent
of the 463 financial advisers surveyed by Aite Group, a research
firm based in Boston, said they found social media to be useful
to their businesses. LinkedIn use was up 10 percent since 2009,
but professional use of Facebook and Twitter dropped 10 percent
and 8 percent, respectively, and blogging was down 9 percent,
according to the Aite study.
But that doesn't mean advisers are not engaging off the
radar. Josh Brown, a financial adviser at New York-based Fusion
Analytics who is known as The Reformed Broker to his 35,000-plus
Twitter followers, says many of his friends at major brokerage
firms regularly visit sites like Twitter, just to keep tabs on
the chatter. Some are interacting using anonymous accounts, he
said, a danger if their company's compliance office finds out.
It is unlikely that firms will make a wholesale shift to
allowing open or even mid-level access to social media websites.
But for advisers, there are benefits to simply listening on or
lurking on social media.
EARS TO THE GROUND
Of course, not everyone is worth listening to. To start,
financial advisers must figure out which influential people to
follow and then devise a strategy to keep tabs on what those
people are saying.
LinkedIn is a favorite among financial advisers because it's
easy - and usually compliance safe enough - to simply maintain a
basic profile page and connect passively with others. A research
study by LinkedIn and FTI Consulting Inc in May 2012 found that
9 out of 10 financial advisers who use social media for business
purposes used LinkedIn, while less than 30 percent used
Facebook, Twitter or Google+.
The site's search function allows users to find peers with
similar job titles, scan lists of people who work at particular
companies or in particular sectors - you can even filter results
by zip code - and find discussion groups to join. There's a
multiplier effect to primary-level connections, said Jennifer
Grazel, global head of category development for financial
services at LinkedIn.
"If I have 1,000 people in my first degree, that's 800,000
amplified to the 2nd degree," she said.
Lurking isn't all that useful on Facebook, says Mike
Slemmer, principal at The Collaborative and Advisors Trusted
Advisor, consulting groups based in Boston that have studied
social media usage among financial advisers. "It's too
unstructured and (there's a) perception that it's very much for
friendship and consumer-based usage," he said.
But on Twitter, listening might be useful. Brown says he
follows the major journalists covering his interests, plus
individual brokers who tweet and interact with him. The news
tends to cycle over the course of the day, he says, as
influencers talk about particular stocks or regulatory issues,
and those become news segments later in the day - with the
people who were tweeting about a topic earlier in the day
invited as guests on air on various cable or news shows.
HOW TO LISTEN
Once you have those thousand connections on LinkedIn (or
even just 200), the goal of most advisers is to convert that
"Having basic read-only skills and leveraging search,
advisers were able to garner a lot of prospects," says
LinkedIn's Grazel, according to the research for the 2012 study
and others she has conducted since.
For one thing, clients seem ripe for the picking.
LinkedIn found that 87 percent of investors use social
media, but only 4 percent of them were interacting with advisers
through a social media platform. Of the small percentage that
did interact, 54 percent said they found value in doing so.
Even though advisers can be constrained from being active on
LinkedIn, they still can use their monitored email to correspond
with connections gleaned from the site.
For those who were allowed a little more activity - like
being able to use the site's InMail feature - they were "turning
a cold call into a warm call just by reaching out and
connecting, with current clients, colleagues," said Grazel.
Those allowed to go even further and send out educational
materials through the site have been landing many clients, some
with big portfolios to manage. Robert Fuest, chief operating
officer and head of investment research at New York-based Landor
& Feust Capital Managers, constantly cultivates his list of
connection and sends out information to his list, and it has
paid off in millions of dollars in new business.
"If content is good enough, and not sales-based, people will
connect back with you," he says. "You are slowly pulling them
in. The reason why it works is because they know who you are."
PROCEED WITH CAUTION
The underlying reason for restricting engagement on social
media at financial services' firms is the risk that advisers let
loose in the vast and fast-moving world of social media will
stray from their rule-bound world.
"I respect why the big wirehouses are hesitant to give
30,000 advisers access," Brown recently told a panel on Wall
Street and social media in New York.
Nevertheless, he thinks that big firms have about two years
to put together a plan for access, or they will be left behind.
If their advisers are not engaging with Twitter, they are
missing out, he says.
"Twitter is where the news is made."