"Nuisance. I hate 'em and hate when people ask me to join. I ignore them mostly," says Jeffrey Broadhurst of Broadhurst Financial Advisors, Inc., Lansdale, Pa., with 16 contacts on LinkedIn.

"I have not found a way to use [business networking sites] to my advantage yet. Sometimes I wonder what's the fuss," says George Papadopoulos, CPA/PFS, CFP, in Novi, Mich., with 120 contacts on LinkedIn and a presence on Plaxo, as well.

These two advisors are referring to invitations they received from business networking sites, of which LinkedIn (http://www.linkedin.com) and Plaxo (http://www.plaxo.com) are the two best known. Still in the dark? Ever heard of Friendster? Perhaps not, but you've undoubtedly heard of MySpace. Then here's the progression ... Friendster is a "social networking site" founded in March 2002 that influenced or directly spawned the development of both social and business networking sites. MySpace, for example, was birthed in August 2003 and, by mid-2006, had opened 100 million accounts. For what purpose?  To allow its users-mostly teens-to create "profiles" customized with photos, background music, uploaded videos, blogs, e-mail and other communication tools in order to attract to their MySpace pages a collection of "friends."

The success of MySpace certainly inspired Facebook, an early-2004 social networking site aimed at a slightly older crowd-college students-that has expanded to include anyone over the age of 13. Facebook extended the social networking paradigm by allowing users to join networks based upon commonalities such as schools attended, employers and geographical proximity.

Simultaneously with MySpace, the business world was catching on with the development of sites like LinkedIn and Plaxo. Both sites boast 20 million-plus users, and LinkedIn is said to be growing annually by almost 500%. The problem, as demonstrated by Broadhurst's and Papadopoulos' remarks, is that many users who've merely dipped their toes in the water still don't understand exactly why they want to go in the water at all; perhaps they just have a nagging belief that when these sites' potential is revealed to them, their free memberships will have them poised to tap into it. (That is, unless they've become overburdened with connection invitations; Bill Gates recently canceled his account with Facebook, in which he is an investor, when he began receiving more than 8,000 friend requests a day).

The Vision

Some might say LinkedIn and Plaxo aren't doing a particularly good job of communicating their vision if so many users are so in the dark; others might say it's a moot point because the sites' inherent viral marketing capabilities seem to have both sites reaching the proverbial "tipping point" right about now. We've been through the period where early-adopting techies and PC publications have reviewed the sites online, we've progressed to where few people haven't received at least a handful of invitations, and we're now at the stage of triple-digit growth.

So let's dig in and see what we've got. First, what do these sites do and how do they compare? The original vision for LinkedIn, says Krista Canfield, LinkedIn's public relations manager, was "to create a place where professionals could network, learn new things, collaborate, and make and receive introductions. With 21 million members, there's a good chance someone out there can answer your question, too," says Canfield, referring to LinkedIn's "Answers" feature, whereby users can search for answers to questions by experts on the network. "There's a pay-it-forward mentality," says Canfield, "whereby one person helps another, knowing someone else will, in turn, help him later on."   

While the vision hasn't changed, it has grown. "We just issued LinkedIn Mobile for Smartphones [visit m.linkedin.com with your phone's browser], as well as Company Profiles," a company-level profiling system much like that for individual users. In general, says Canfield, user and company profiles are handy for getting background on folks one is considering doing business with; the mobile feature makes it that much more powerful. If you need info on a person you're about to meet with outside the office and he's a LinkedIn user, that information is available to you via your phone.

That's just a snapshot of LinkedIn which, like Plaxo, has so many bells and whistles that advisors should plan on spending at least a few hours to acquaint themselves with all its features. John McCrea, Plaxo's vice president of marketing, discussed the company's vision: "Plaxo, LinkedIn and even Facebook are uniquely building businesses around who you know. The first wave was strangers connecting to each other as 'friends,' but Plaxo has always been about linking to people you already know."

Plaxo's original vision, he explained, was to help users keep addresses up-to-date because we all struggle to keep current contact info for our friends, clients and business contacts. Plaxo turns this around and says-let everyone keep their own contact information up-to-date in a Web-centric location so everyone they network with will have the most current information at all times. Plaxo even syncs directly with the user's desktop installation of Outlook to keep it updated, too.

So where does Plaxo not overlap LinkedIn, and what's Pulse? I ask. Responds McCrea, "Plaxo is less about helping users get introductions to other users and more about keeping you richly connected to people you already know and care about. We added Pulse-our version of social networking-to deliver feeds, blogs, links to stories, photos, videos, eCards... it's much more about content sharing." Also, McCrea says, Plaxo now comes in a mobile version (m.plaxo.com).

And herein lies the difficulty in categorizing communications and networking tools like LinkedIn and Plaxo: they're so competitive and fast-changing that, at virtually the same time McCrea is promoting his system's mobile version as something seemingly unique, LinkedIn is announcing its own site optimized for the Smartphone experience. Meanwhile, both sites are duplicating popular third-party communications tools like Twitter, for example. (Twitter is a Web site that connects users for the purpose of answering a single question,  "What are you doing?" Although Twitter isn't universally known yet, LinkedIn and Plaxo have already incorporated its query onto their own sites, making them moving targets of bundled communications utilities that can return tremendous benefits-if you commit yourself to trying out their frequent additions and improvements.

So which system is right for you? In spite of their differences, they both help you keep your contacts up to date. McCrea has his opinion: "One thing I observe in my interactions with financial advisors is the ones who do the best job end up being like a friend or family member to their clients." In other words, those clients who know you really well and who are on Plaxo/Pulse might like to view the home movie you uploaded to YouTube and linked to your Plaxo page.

In truth, I believe a lot of advisors would like to see one site that does all of what LinkedIn and Plaxo/Pulse do, and maybe that's where the competition is headed. (Of course, that would mean that one of these sites would go under and/or be bought up by the competition, which is not necessarily a bad thing).

The Proof

Experience has taught me that computer software that appears on paper to be the answer to one's prayers can, in real life, sentence one to temporary madness-so testing is mandatory before drawing conclusions. The problem is these sites require that aforementioned up-front commitment before the payoff starts to happen. You need to create a complete personal profile and you need to get your contacts in place.

With only enough time to do this on one of the two sites, I chose LinkedIn, and here's why: Both sites claim to have approximately the same number of users and they both appeal to businesspersons, but when I searched each site for all of the contacts I wanted to attract to my address book, I found far more on LinkedIn than on Plaxo. Taking a random sample of 30 of my 123 LinkedIn contacts, only 10 of them were also on Plaxo. And when I created a list of tech-savvy advisors to interview for this article, relatively few were using Plaxo, or both Plaxo and LinkedIn, while the rest were solely on LinkedIn.

So, like many business networkers, I started by going onto LinkedIn, locating my two-year-old bare-bones profile, and filling it out as completely as possible. (There are many rudimentary profiles on these sites because people respond to invitations for the first time, sign up, add just enough facts to their profile so they are identifiable, and then let the profiles languish after failing to devote the time needed to explore the site's offerings). Once my LinkedIn profile was complete, I constructed a "public" profile as well, using the link created for me by LinkedIn and adding my name to it: http://www.linkedin.com/in/daviddrucker. (If you Google me, this link comes up pretty high on the resulting list).

I searched out and connected with everyone I could find on LinkedIn who was already in my address book. I used LinkedIn's recommendation feature to provide written endorsements to be displayed on some of my connections' own LinkedIn pages (and some of the folks I recommended returned the favor). I typed company names into LinkedIn's search box to find all the individuals within those companies already on LinkedIn to whom I wanted to send an invitation. And I created a Group called "David Drucker's Media Experts," which LinkedIn approved after several days and to which I'll invite advisors whom I'd like to interview for future stories. In coming days, I will also try out LinkedIn's Answers feature (ask a question and invite an answer from your network-not just from your connections, but all of their connections too), and I'll review each of my contacts' connections to find persons to whom I want an introduction.

And this leads me to share with you the most important lesson I've ever learned about new software: It's best experienced with the same mindset you brought to a new toy as a child. Don't learn the software; play with it. New software systems can be fun when approached with this mindset. The more you play with LinkedIn and Plaxo, the more you'll see each site's possibilities.
Now let's see how advisors are using LinkedIn or Plaxo.

Marketing

Malay Vasavda of Quantum Financial Management in Chicago says he sees potential in business networking sites for the marketing process. "One thing you can do with these sites is highlight your professional history online. If someone tries to find me in Google, my LinkedIn profile is the first thing that comes up. It has my entire professional history, or resume-not just what I've done as an advisor. I can show nonadvisor as well as advisor experience, which is very powerful, as is leaving recommendations for one's contacts."

What isn't clear is whether the SEC's prohibition against client testimonials would apply in a situation where a client becomes a LinkedIn user and subsequently writes a recommendation for his advisor who's also a user. A few of Vasavda's clients have left him recommendations and, he says, "Now I'm getting client referrals from strangers because they read my clients' recommendations."

Expert Advice

Eddie Kramer, a financial advisor with Abacus Planning Group in Columbia, S.C., uses both Plaxo and LinkedIn-the former to stay in touch with friends, and the latter to find answers. "LinkedIn is where I go to get answers to many of life's questions, from landscaping to petroleum engineering."

Introductions
    Adds Christian Farber, a senior sales executive with Albridge and a former Advent employee, "At one time, I thought LinkedIn might be a place where I'd want to work, and its CEO, Dan Nye, is a prior Advent employee, like me. However, Dan's LinkedIn profile says, 'If I don't know you, then don't reach out to me for connections,' because he has a big name and everyone wants to connect with him. So I reached out to a friend already connected to Nye and asked for an introduction."

The friend sent Nye an e-mail extolling Farber's virtues and, a day or two later, Farber received an e-mail from Nye saying, "Hey Chris, let me point you to a couple of other people here who came over from Advent," and he also said "I appreciated your e-mail," "which I interpreted as meaning, 'Thanks for following LinkedIn's rules for communicating,'" says Farber. "I thought it was pretty cool that a guy who knows Bill Gates would point me in the right direction. It underscores the power of LinkedIn as a tool."

Recruiting And Job Hunting
    Penny Miller, a former outplacement consultant, says LinkedIn is one of the most valuable tools she's seen for connecting with people at target companies. "At one time, I wanted to send my resume to CB Richard Ellis [a real estate company] regarding a position. I searched LinkedIn and, through a first-degree connection [think "six degrees of separation"] was able to connect to a first-degree connection of a current CBRE employee. He said he'd be happy to share nonconfidential information about CBRE's company culture and hiring practices. We made an appointment to chat over the phone and he was gracious enough to spend about 30 minutes with me. When you do this, you get good information and if you make a good connection, the person sometimes is willing and able to pass your resume along to a hiring manager."

Says Elissa Crowther, director of marketing for Litman/Gregory Asset Management LLC in Orinda, Calif., "My husband actually found his current job through LinkedIn, and I love it for connecting with old Schwab colleagues and folks I worked with internationally."

People Research
    Stuart Tarmy, formerly with Albridge and presently vice president of sales for GainsKeeper, a firm developing portfolio accounting systems for broker-dealers, uses LinkedIn extensively in his sales capacity. "I first started using LinkedIn around three to four years ago," says Tarmy, "and have my browser open to it almost daily." Tarmy uses it to research the companies and people he'll be meeting with when he visits a broker-dealer client, and to search for people he doesn't know but wants to meet. Also, he says, "LinkedIn is a great way to find candidates for a job position; my company hasn't actually posted positions there, but we're thinking about it."

Syncing With Outlook

David Lawrence, a practice efficiency consultant and head of David Lawrence and Associates in Tampa, Fla., says, "I set up Plaxo years ago as a way to create a network of people whom I'd be able to maintain contact with effortlessly. Plaxo places a toolbar in Outlook with the ability to update information, eliminate duplicate entries, create and print business cards, invite friends into the network, edit my profile and even send eCards directly. One of the real values of this type of service is the ability to mass update everyone you know."

Lawrence also suggests you upload your photo to your page, as it helps avoid confusion over common names. "It's sad to say, but there is more than one David Lawrence in this world," he notes.

Networking's Importance To Financial Advisors

The critical question, after playing with Plaxo and LinkedIn and seeing what they have to offer, is: "Will these be essential business tools in the future, or are they just a passing fad?"

Kevin Condon, Ph.D., CFP, long-time advisor and, more recently an executive vice president for advisor services for Myfinancialadvice Inc. of Boulder, Colo., says, "Our profession has been remiss in how we've developed in that there are lots of things we could have done, and should have done, to network our profession better. If planning survives and grows as a profession, I believe it will have a basic designation with sub-specialties, and networking will be important because advisors will need to call in experts for clients with specialized needs."  

Now, advisors find specialized expertise either through on-the-job training which the client pays for, or by going on NAPFA and FPA forums to ask questions. The problem with forums, says Condon, is advisors, who aren't necessarily experts, sling casual advice about complicated topics.

Will business-networking sites be the basis for the networking that Condon sees as so critical?  Only if we make it so. John Comer, owner of Comer Consulting LLC in Plymouth, Minn., with 160 LinkedIn contacts, says, "I have come to believe that LinkedIn works the same as all networking-you have to do the work, but if you do, you will see the benefit."