Finra says social media is OK. BDs are implementing compliant systems. So for advisors, using social media is easy and free, and they have little excuse, at this point, to resist the revolution.
Finra early this year released Notice 10-06, its long-awaited position on the use of social media Web sites by registered reps. The notice says that preapproval is not required of "non-static" content (such as tweets, status updates and blog comments). But static content needs preapproval (i.e., your profile on LinkedIn, Twitter or Facebook). Non-static content must be supervised (i.e., archived, filtered), but requires no preapproval. Clarification is still needed, but Finra has opened the way for registered reps to use social media.
Most BDs have told reps they can't write blogs, and many simply have forbidden the use of LinkedIn and Twitter. With Finra giving the go-ahead, however, BDs have now begun introducing compliant technology systems that enable registered reps to write blogs, respond to comments on blogs, tweet and post content on social media sites. It's a watershed event in advisor marketing. For example, Cambridge Investment Research, which has 1,800 registered reps, just announced the launch of a social networking pilot project. Cambridge says it selected a vendor that enables it to supervise its reps' social media activities on Facebook, LinkedIn and Twitter. If the pilot program is successful, the firm will launch the program for all of its reps in August, according to Cindy Schaus, Cambridge's vice president of sales and public relations. Schaus says Socialware, the social media compliance system that Cambridge is piloting, lets a BD compliance analyst set rules for monitoring posts at the rep level. So the BD can require preapproval of tweets posted by one rep but not for another. The adoption by BDs of such systems is the beginning of the end of the social media revolution. The old regime has been overthrown and a new marketing regime-social media marketing and blogging-is now taking hold. Social media marketing is now legitimized as part of an advisor's marketing campaign.
Meanwhile, many registered investment advisors, unhampered by the compliance requirements imposed by the BDs, are already using social media-although the technology's effectiveness at these firms and their compliance efforts largely remain unknown.
Advisors And New Technology
Yet advisors are very slow at adopting new technology. In late 1996, when I started making Web sites for advisors, I figured that, by the end of 1997, 80% of independent advisors would buy a Web site. Thirteen years later, most BDs say they have yet to reach the 80% mark. In fairness to advisors, anytime new technology is introduced, it's reasonable to expect a delay in widespread adoption. After all, advisors are supposed to be prudent.
Complicating matters is the surge in new technology they can adopt: Ever since the fax machine was introduced in the 1980s, the pace of innovation has accelerated, markedly so in the past decade. The technology revolution has led to personal computers, Microsoft Windows, network servers, the Internet, e-mail, spam, antivirus, smart phones, Web-based applications and now social media-mind-numbing technology changes that have transformed the small business world. Meanwhile, most successful independent advisory firms are owned by people in their 50s and 60s, people understandably tired of all the unrelenting technology change in the latter half of their lives. That spells opportunity for those who think young.
Let's face it: The notion of social media networking sounds silly to many advisors. Twitter, as Jay Leno pointed out recently, sounds like a urinary tract condition, and Facebook rose to prominence as a site for kids posting comments about pictures of drunken antics at frat parties. And of course the big reason advisors avoid social media is they fear running afoul of compliance. How will Securities and Exchange Commission examiners treat RIAs who are blogging, tweeting and asking friends for recommendations on LinkedIn? We simply don't know yet. If they are careful and archiving their social media profiles and comments, then they should be just fine-because it's just like any other advertising material, after all. But if an RIA rep is not taking compliance seriously, there's a chance that eventually SEC examiners will crack down. The same is true of registered reps, but they have mostly stayed away from social media and blogging because their broker-dealers watch them more closely than the SEC and state regulators watch RIA reps.
Advisors must realize social media are not a fad. Just as fax machines, e-mail, network servers, Web-based applications and a string of other innovations once helped you build your business, blogs and status updates are about to become key vehicles in advisor marketing. Online marketing is where all marketing is headed, and social media networks are a key component of online marketing. Facebook is clearly the most popular social networking site, and it trails only Google in visitors. The largest social network, the six-year-old phenomenon Facebook says it has more than 400 million active users and that half of its active users log in on any given day. The average user has 130 friends and people spend more than 500 billion minutes per month on the site.
LinkedIn, meanwhile, says it has more than 70 million members in more than 200 countries, about half of them from America. A new member joins LinkedIn approximately every second. Twitter says it has about 125 million registered users and is adding about 340,000 daily. Its search engine gets more than 600 million queries daily and it gets about 190 million unique visitors a month. About 65 million updates are posted daily by users.
The number of people networking on social media is booming. According to a recent study by the Pew Internet & American Life Project, Internet users are now more likely to search for social networking profiles than they are to search for information about someone's professional accomplishments or interests and "a Facebook profile may get more traffic than your resume or your bio on your employer's Web site." With these kinds of statistics, it is undeniable that you must learn how to leverage social networks and blogs in marketing your services.