Social media, mobile devices and instant messaging have fundamentally changed the landscape of communications in business and in life. One only need look around to see the multitudes of young people opting to text message in abbreviated (and sometimes invented) language instead of more conventional forms of communication, such as spoken conversation. Yet for a financial profession rife with an aging population of practitioners who may not have been born into such methods, acceptance has been slow.
When it can be demonstrated that social media and other forms of electronic communication can produce greater efficiencies and result in higher profits for a firm, acceptance in the use of such methods is more likely to occur. The simple fact is that firms will be taking on clients, and in doing so likely will encounter younger clients who do embrace Twitter, Facebook and other venues. For the firm to resonate with such clients, it may be forced to embrace these communication forms. Because of the advent of these, most broker-dealers and other institutions have adopted social media policies.
The Financial Industry Regulatory Authority addressed the issue with Regulatory Notice 10-06. In September 2009, Finra organized a Social Networking Task Force composed of Finra staff and industry representatives to discuss how firms and their registered representatives could use social media sites for legitimate business purposes in a manner that ensures investor protection.
The result was a set of guidelines that included record-keeping responsibilities, suitability responsibilities and supervision of social media sites (third-party posts, etc.).
The SEC also addressed the issue with a letter to advisors back in January 2011. The SEC has asked advisors for documentation on how they use social media sites such as Facebook, Flickr, LinkedIn, Twitter and YouTube, among others-as well as blogs. The main concern is that, as with any form of advertising, the advisors are not using these sites to promote guaranteed returns or other prohibited forms of advertising.
However, neither Finra nor the SEC is prohibiting social media as a viable communication venue so long as the rules are followed. This has opened the door for advisors to post links on Web sites to their Facebook pages, to Twitter or to other social media outlets. The push to use these kinds of media has propelled professional sites such as LinkedIn and Plaxo to greater heights of popularity. So much so that on May 19 of this year, LinkedIn enjoyed the largest IPO offering since Google's in August 2004.
But for many advisors, the questions remain about how to integrate these new venues successfully into their practices. Can every financial practice benefit, for instance, from a Facebook page? Is Twitter really necessary? And perhaps most important, how can they be used efficiently without giving a financial advisor or staff extra work?
The answers lie in what sort of financial practice the advisor has, what the demographics of the clientele are and to what extent these tools can be efficiently integrated with the other technology already in use at the firm.
For example, if a financial advisory firm has created a Web site for its practice but never tried to discover who is visiting the site, what's being looked at (through page counts) or how often people are returning, then the firm will have no idea whether what it has posted is resonating with clients or the public. Running statistics on a client base and/or surveying clients to determine their interests could be two ways to begin the process of understanding what content should be on the Web site. Once this is determined, adjusting the content to match these wants and/or needs can have a remarkable effect on the site statistics.
The same is true for a Facebook page. Though different in character from a traditional Web site, it is still a communication medium, and the content, posts and other information should be carefully reviewed to determine its effect on the visitors to that Facebook page. Without this sort of feedback, the advisor will have no clue about whether the effort of creating the Facebook page was successful.