Financial advisors are stepping up use of social media. Seven out of 10 advisors surveyed for a report last year by FTI Consulting and LinkedIn said they already are using social media for business purposes. But for advisors on the sidelines, the big question is, How do I start?

An Aug. 8 webinar, “Strange Bedfellows—Compliance and Social Media,” sponsored by Financial Advisor magazine and Finect, the simple, compliant social media platform, went to the source for answers: top financial pros themselves.

The panelists were Michael Kitces, partner and director of research at Pinnacle Advisory Group and author of the popular “Nerd’s Eye View” blog; Brittney Castro, founder of Financially Wise Women; Charles Massimo, founder of CJM Wealth Management; and Bob Bacarella, founder of the asset manager, Monetta Group. Finect President Jennifer Openshaw moderated the discussion. Here are some key takeaways from the talk. ( Click here for the slides.)

What did you wish you knew when you started using social media?
 

Kitces: "You ultimately need some way to keep the connection and go further.” Social media, he says, is much like attending a networking meeting—you can show up, but you won’t generate any business unless you leave with a business card. As effective a tool for interaction that social media serves, “there’s still relatively limited interaction,” he says.

Castro: “I wish I knew it takes time…Any networking relationship takes time—to build a connection with people, engage with them, provide value and have them become a regular follower and become part of your community and want to hear from you regularly. These are still people at the other end of the Internet line; you must talk to them like real people.”

Massimo: “I wish I knew better how to engage the right type of people and then be able to gauge how many people are actually reading your social media.”

 

Bacarella: “It’s not as restrictive as we first thought. We weren’t quite sure what we had to do to comply with Finra and SEC. Many tweets and posts that are being made don’t require approval.”

Openshaw: “The SEC and Finra are OK with you using social media. It’s that you need to be operating by the rules and that means having a system in place.”

 

How long were you doing social media before you could see it making a difference in your business?

Kitces: He saw a 12-month ramp-up before he saw meaningful interactions that could be traced to social media activity.  But his experience is based on a period years earlier when there was a smaller audience in his industry. He suspects that a ramp-up today would move more quickly because more people are in social media.

Castro: “The way I measured results was more holistically. I wanted to engage with other thought leaders and centers of influence, and I saw those results come in right away.” Getting clients and prospects took about six months, she estimates.

Massimo: He didn’t expect large results at first, since his practice has a $1 million minimum account. Still, he was “shocked” when he was able to land a $1 million client through social media, which validated the effort. “It’s about awareness. If we can continue to communicate with our centers of influence with meaningful content, for us that’s going to be an ROI that we may not see immediately, but we will definitely see over time.”

Bacarella: His firm has never used social media until recently, when it signed up with Finect. They updated their compliance manual to allow for it and are now fine-tuning such things as procedures and tracking activity. “We’re very optimistic over the use of social media as a way of developing our brand and identity in the marketplace.”
What shapes your decisions on whom to work with when hiring consultants and outside vendors?

Kitces: He prefers dealing with consultants who are experienced in working with financial advisors. Social media in this industry is practiced differently than in other industries. And he wants social media consultants who actually are involved in it. “I still remember I once had a conversation with a social media consultant who had almost no presence on social media. She said, ‘I don’t really have time to do social media while I’m building my consulting business.’ My jaw hit the floor.”

Castro: She runs a small business and prefers working with consultants who work in that sector, not an expert in big corporate campaigns. Castro, who’s 29, also wants someone who resembles the kind of person she is, someone with “a similar vibe.” Age matters in finding expertise in social media, she says—“People five years younger than me already know so much more than me about this stuff.”

Massimo: “I’ve always been a big believer in outsourcing as much as I can, because it does take up more time than you’d think….I don’t know if I can ever find the perfect person but it’s definitely going to be an ongoing process for us.”

Bacarella: The key is outside help that can assist the company with timely needs, such as live responses to social media posts.

Openshaw: When Finect planned its launch, it collaborated with former Fidelity International General Counsel Stuart Fross to produce a compliance kit to help advisors understand the site’s features that would help them remain compliant.

Excluding compliance, what was the hardest issue in getting started?

Kitces: Finding the right tools. “Social media is an engagement process; you need some comfortable way to do it.”

Castro: She wanted the best system for posting a lot of content and getting it approved beforehand. She keeps fine-tuning her system. “You have to see what works and doesn’t work. I think the earlier that advisors can start the system, the better.”

Massimo: Creating an entire plan around social media. “It’s one thing to say, ‘I’m going to have a Twitter page, a Facebook page, a LinkedIn page. Now what are you doing with it? What’s the plan? What was the content that was going to be posted, how often was it going to be posted, how was I going to engage, how was I going to track?”

Bacarella: You need a staff member dedicated to the task, and well-trained. “Vanguard has 85,000 followers on Twitter, they have tweeted over 7,000 times, but they have eight people dedicated to following these procedures.”