The Socially Savvy Advisor

Compliant Social Media for the Financial Industry

Jennifer Openshaw

• Publisher: Wiley
• Year: 2014
• Print ISBN: 9781118959077
• eBook ISBN: 9781118959084
• Edition: 1
• Topic: Business
• Subtopic: Finance
• Index: Business

The social media marketing bible for the financial industry

The Socially Savvy Advisor: Compliant Social Media for the Financial Industry is the complete guide to creating an effective social media strategy without breaking the big rules. Written by an industry specialist Jennifer Openshaw, alongside Stuart Fross, Fidelity International's former general counsel, and Amy McIlwain, president of Financial Social Media, this book merges marketing basics with FINRA and SEC guidelines to help readers create an effective social media campaign specifically for the finance and investing world. Contributions from industry leaders at Charles Schwab, Citibank, and others provide inside perspective and experience so readers can tap into a new audience. With a focus on compliance, the book clears common hurdles while dispelling myths and outlining effective methods and techniques. Readers also gain access 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 solo practitioners to large asset managers, everyone's consumed by how, when, and where to use this new and powerful medium—but guidance is hard to find. The Socially Savvy Advisor covers the entire issue, from platform, to content, to what not to do.

• Best practices in using social media for advisors and compliance officers
• Planning for the regulators, vs. failing to plan
• Challenges with LinkedIn, Facebook, Twitter and other social platforms
• Elements of a good social media policy
• Managing the top issues related to marketing and business development, engagement, and compliance

With the right plan and the proper technique, social media marketing can dramatically improve client outreach and retention. The Socially Savvy Advisor provides the expert insight, tools, and guidance that shape a robust, effective strategy.

Part One
The New Business Environment

Chapter 1
How 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:

1. Convening—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.
2. Sharing—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.
3. Reacting—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.
4. Opining—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.
5. Protecting—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 m...

Table of contents

• Cover
• Related Titles
• Title Page
• Copyright
• Dedication
• Foreword
• Acknowledgments
• Introduction
• Part One: The New Business Environment
• Part Two: The Regulatory Environment
• Part Three: Key Playing Fields in Social Media
• Part Four: Marketing and Business Development
• Part Five: Client Servicing
• Part Six: Managing Social Media Compliantly
• Appendix Sample Social Media Policy
• About the Author
• About the Contributors
• About the Companion Website
• Index
• End User License Agreement