How does this trend impact advisors?
"I am a big believer that everything old is new again. Take all the knowledge of the offline world and use it in the online world. Social media can scale what has always worked. It helps build the referral engine that delivers deep and effective results," says Davis.
Most advisors get a majority of business from referrals. Traditionally, these have been given in person. Now through social networks, a person can ask not just one person, but hundreds of people for recommendations by simply posting a quick update like, "Any recommendations for a good advisor?" The discussion will result in referrals and it will be shared with many to see.
Blane Warrene, CEO of Arkovi, agrees, saying, "Recent developments in social search are motivation for advisors to truly study and know how to effectively use social media. A client has been able to refer business by word-of-mouth for years. Now they can refer clients, without it being a testimonial, through a new additional channel that never existed before."
Recognize the trends and be active using social media
"The loudest voice in the social world isn't necessarily the best voice," says Davis. It is a good point; however, a voice that is not heard is one that is wasted.
Advisors should stay ahead of these three trends-if they do, they will gain a competitive advantage. We are just seeing the tip of the iceberg of how an individual's networks will help a business be found and indirectly sell products and services.
Visit the "social media" section of FA-Mag.com to read other articles Mike Byrnes has written for Financial Advisor on the topic of social media. If you are just starting out, there is also a good "how to" video to help develop simple strategies for using Twitter, Facebook and LinkedIn.
An Industry Limitation Worth Keeping?
It seems that the compliance rules on testimonials might be behind the times. Although they do possibly protect the public from getting scammed, they actually hurt prospective clients from learning from the experiences of others. Even if the limitations stay in place, advisors can only control so much (like turning off recommendations on LinkedIn profiles). The industry will have a hard time stopping the public from sharing opinions online. It will be interesting if FINRA and the SEC figure out a way to embrace the social shift that is taking place.
Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at www.byrnesconsulting.com.