A question that constantly surfaces -- how are financial advisors and firms using social media? And, to what end? More specifically, is LinkedIn trending as the primary source of social activity in our industry?

Since 2009, we’ve also asked those same questions at live events, in roundtables with our customers and in surveys. However, we’ve found that often turning to real world data tells us more. In 2011 we started our annual “look into the archives” where we seek to understand the quantitative and qualitative statistics within.

But first, we have to step back and observe that some things need to be in place for an advisor and firm to become digital. It starts with some fundamentals:

1) Understanding how the existing regulatory rules and guidance applies to the digital space.
2) Determining how we want to present ourselves on social media (i.e. customer service. educational, a networker or as leaders – or a combination)
3) A firm grasp on the technology for content creation and publication as well as managing compliance.

A lot of digital and printed ink has been spent discussing those three fronts. Once protocols are handled, then the question moves to: how do we handle engagement (how people respond to our content and how it is shared)? To consider engagement, we look into the data.

It starts by considering what is trending in 2013 for financial advisors using social media. In our case – we look at a sampling of our archive data in aggregate to come to some conclusions.

The Lean Toward LinkedIn
Part of the "lean toward" LinkedIn suggests an initial comfort level. Since its launch in 2004, LinkedIn has grown in acceptance as a business and networking tool. However, it was not considered social media before the phrase took new flight in 2008/­2009. There is a comfort that LinkedIn is understood, and folks who may feel less savvy on other social platforms are confident they "get it" with LinkedIn.

From 2010 to 2012 advisors were making connections and some profile optimizations. In part due to the shifting feature set of LinkedIn, as well as the swell of commentary on the application of LinkedIn for business, in 2013 we see significant upticks in profile updates (embedded files are one of those new features, as well as expanded data points, like Projects and Publications among others).

Status updates have trended up quite a bit as folks are simply using their stream more regularly and sharing or creating content.

Specific upticks:

• In 2011, LinkedIn accounted for 3 percent of volume in our archives, in 2012 it was 20 percent and  in 2013 year to date it’s 25 percent. The number of profile changes has doubled year over year.
• Skills use exploded as soon as the new features emerged (the nudge that LinkedIn provides when visiting certainly encouraged that.)
• The top two other areas of profile changes are Positions (not just job changes but edits to the profiles -- i.e., adding new capabilities like slide shows and videos) and Education (extremely helpful for advisors seeking to tap their alumni connections network).

A preference for LinkedIn trends in most industry surveys -- and makes sense considering that “lean” toward something comfortable and understood. However, there remains some confusion about what needs to be in social media policies and also how the technology works.

It starts with the LinkedIn profile -- once that profile is approved (easiest of the compliance steps), then all is good. Firms need to monitor and retain the activity such as status updates and profile changes.

At some firms, we do see policy constraints around genuine engagement and content creation and here there is a risk of reduced legitimacy in the long run (i.e., when a firm enables social and then allows its workforce to use only content the firm creates and distributes, without narrative or editorial freedom).

On the technology front, LinkedIn does have a more layered approach with their API from a technical perspective -- and many data points a financial advisor or a firm would want for discovery, compliance and reporting can be inaccessible. Connections data is one example where, with more recent moves by LinkedIn, a popular tool [Job Change Notifier, which advisors relied upon to surface 401(k) rollover opportunities as an example] is now shutting down.

However, the data needed specifically for compliance is largely present, but an advisor or a firm will need to use a technology solution to get it, which pushes the burden of jumping through hoops for the data from the firm to the provider.

One of the technology challenges of social media activity (and really, any of the modern digital actions that are not driven through a singular channel, such as Web site or e-mail communications, is that you have to juggle numerous mediums (audio, video, imagery, text et al) and multiple channels (first screen, second screen and now third screen -- as in computer, tablet and smartphone). This all has to be supported, captured and then normalized in a way any daily user can consume and interact with it.

This is no small effort. We’ve spent four years immersed in the integrations, data and finding ways to keep this as simple as possible and keep learning something new daily.

The other technical challenge is the pace. We track and adjust our solution weekly and monthly to pace the shifts on social platforms.

For a forward look, as APIs mature some with large development communities it becomes much easier to resolve the compliance and data management challenges. Contrary to some conventional wisdom, the Twitter API is one of the best to work with. I would set Google as second (including YouTube) and Facebook right after. We get expansive data footprints from those tools.

Engagement
On the engagement front, we see deeper engagement on Facebook than on LinkedIn – though LinkedIn activities are expanding, as we reflected above.

• For Facebook, our latest stats show one­ third of Facebook archive data is Facebook Mail -- people want to communicate and engage. Likewise, 25 percent of Facebook archived data is comments, a nice uptick in engagement with our customers.
• One quarter of Twitter archive data is Mentions of our users and RTs of their content -- a nice engagement ratio off the total.
• With Google+, also an approximate one­ quarter of Plus archive data is engagement we track -- +1s and Reshares of posts. Now that we've just added support for Business Pages (in July 2013) we will see that number tail up.
• As you might expect, photos continue to surge up on Facebook and now Google+ as it is just too easy to share photos there with the automation on smart phones and tablets.

Recommendations And Endorsements On LinkedIn
Endorsements are such a murky territory -- a client can endorse an advisor verbally or in writing (of their own accord) without issue. It is how business is done. It is simply the endorsement being visible to a wide, uncontrolled group that converts it into an advertisement. Those are clearly prohibited.

However, every day we see firms that prohibit or limit social media, and yet their producers and advisors allow skills endorsements on their LinkedIn profiles. The murky part is that there is not a narrative endorsement -- in essence it is a "like" on the advisor, suggesting he or she is good at that skill (i.e., budget planning, financial planning, public speaking...whatever).

Several advisors who are independent RIAs have said to me, “We won't turn ours off until our wirehouse competitor down the street turns theirs off." A reasonable statement.

We urge folks to disable Recommendations on LinkedIn and for now, without further guidance, to turn off the Skills endorsements. Connections can still endorse—it just does not show who endorsed your skills. And as always, we recommend you send a thank you note to those who do recommend and endorse you. There you can show your appreciation and if needed, also explain why you cannot display them publicly.

In four years we have seen the industry and regulators move from the basics of social media to more intermediate and advanced topics. Surveys and anecdotes are helpful, but looking into actual social media usage of financial professionals provides much more perspective on how and where engagement happens. This insight will help shape and evolve the social media policies as usage patterns and technology changes.

Blane Warrene is senior vice president of customer communications at Reged.