Of all the social networking Web sites, LinkedIn is the one financial advisors use most. But that's not saying much. I have 400 connections on LinkedIn. The vast majority of them are advisors, and the vast majority of advisors have 20 or fewer connections. 

It's possible that advisors who want to network with me are anti-social, but a more reasonable conclusion to be drawn from my experience is that advisors are barely scratching the surface in their use of social networking.

Not a lot of reliable data are available yet on the business use of social networking applications. We don't have much demographic data about who is on each social network or the business benefits of tweeting on Twitter versus connecting on LinkedIn or friending on Facebook. But here are some thoughts that might be valuable as you decide which sites to use for growing your advisory firm and exchanging ideas with other professionals.

They're Not Just for Kids. According to a study released by Anderson Analytics, SPSS and LinkedIn, the number of C-level executives on LinkedIn numbered 2.2 million worldwide last summer, while there were 1.9 million executive vice presidents and senior vice presidents on the network. Some 4.5 million users said they were senior management, while 5.2 million said they were middle management. About half of the users worldwide are in the U.S., and the base was growing last year at a rate of 2 million a month.

By contrast, Twitter users are overwhelmingly young, according to a study by Pew Research Center released in February. However, unlike most other applications with a similarly large youth percentage, Twitter is not dominated by the youngest of young adults. Indeed, the median age of a Twitter user is 31. In comparison, the median age of a MySpace user is 27, while it's 26 for a Facebook user and 40.5 for a LinkedIn user, according to the Pew study.

My guess, however, is that all such studies are outdated soon after release, because the adoption rate of these applications is so frenetic that the demographics of users change almost overnight-in April 2009, Twitter.com had a 3,000% increase in visitors over April 2008, according to comScore.com, and the 17 million visits to Twitter in April were quadruple the February number. In the U.S., users between the ages of 55 and 64 made up 10% of Twitter's total, which is nearly the same figure for those users between ages 18 and 24, who accounted for 10.6%. So you are seeing older Americans adopt social networking at an astounding rate.

Say Something Nice. Unlike traditional marketing, social networking is totally based on being nice to other people and not just selling your services. The key to successful marketing is giving valuable information to your target market. For instance, an advisor trying to market to doctors might post a blog offering a case study of changes he made to a doctor's financial plan after the market meltdown of last year, and then tweet about that. You could use a Twitter add-on like www.tweetlater.com to publicize the post every day for a week. Another nice thing to do is establish a group on LinkedIn for doctors in a particular geographic area in need of financial and business management advice. By establishing a network of financial advisors working with doctors-and including estate planners, real estate specialists, accountants and other financial experts-you could provide a real service to doctors in your community.

It's easy to establish a group on LinkedIn (click on "groups"), but you'll want to search the site and do some research first. You'll have many decisions to make, such as whether to make it open to anyone; what content you will post to describe the group and find members; and what live events, polls and other user-created content you'll want to serve those members once you've found them. Check out LinkedIn's Learning Center for general information about these features or for specific instructions about groups.

Target, Target, Target. Just as the old adage emphasizes "location" as crucial to real estate values, it's also crucial to target your marketing when you're social networking. The more focused you are, the more likely you are to find an underserved niche that needs you and the less likely you are to encounter competitors. For instance, it may not strike a chord with executives if you simply post a message about stock options and restricted stock strategies; you'll more likely hit home if you tweet instead about stock options at a few particular companies. Google Alerts, one great resource to help you stay on top of developments in your niches, is free when you log into your account at Google, and it lets you create searches for the most esoteric topics. When a new mention is made of your search terms, you are automatically alerted by Google via e-mail or an RSS feed. I recently gave a Webinar in which I explained how to automatically tweet your Google alerts. It makes sense to tweet such information because Twitter is good for distributing news. LinkedIn, meanwhile, is better for networking and creating groups.

Find Prospects. Both LinkedIn and Twitter are good ways to find prospects, and though one fishing strategy is not very nice, you should know about it anyway-and that's looking into your competitors' networks. While LinkedIn lets you hide your own network from the public and Twitter lets you block people you don't know from receiving your tweets, the public (and competitors) can still see who is in your network even when you make your updates to Twitter private. So you may want to avoid connecting with clients on Twitter and only use it for prospecting.

To find prospects on LinkedIn, you can search its vast database, clicking "search," and then narrowing that search on the pull-down menu to "search companies." If you want information about executives at Research In Motion, for instance, you can click on "see more" in the "current employees" section at the top of the page and you'll get a list of hundreds of executives. If you only want top executives from RIM, you can use the advanced search to filter for "senior vice president." This allows you to request a connection with top executives at just about all of the 1,000 largest companies in the country.

To find prospects on Twitter, you can search site profiles using some of the new Twitter search engines popping up, including: Tweepsearch, Twellow, Twubble and Mr. Tweet. Also check out a promising new registry for business-to-business searches on Twitter called Twibs. Do a search for "retired professor," for instance, and you'll be able to connect with scores of retired educators. If that's your target client, your tweets will focus on how they manage their financial affairs; this would be a good strategy for gaining their trust, and eventually some of them will contact you about your services. I just engaged a marketing vendor who tweeted me with some valuable information. It works.
Compliance. Regulators offer little guidance about how advisors can use the new tools of social networking, apart from referencing existing advertising rules. I called the Securities and Exchange Commission recently and no one was available to speak about the topic. This has happened before. Regulators were also reluctant to speak publicly about advertising through new technologies when people widely embraced the Internet in the mid-1990s.

To be sure, existing regulations are clear on many aspects of social networking. Still, it could save broker-dealers and RIAs a lot of money if the SEC and FINRA would offer more guidance, because then technology systems could be built to accommodate the rules.

It seems likely that when an IA representative or RIA is "recommended" on LinkedIn, it constitutes a testimonial and thus violates Section 206(4) of the Investment Advisers Act of 1940. According to a treatise entitled, "The Regulation of Investment Advisers" by Thomas Lemke and Gerald Lins, "It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business" for an RIA to directly or indirectly publish, circulate or distribute any advertisement that "refers, directly or indirectly, to any testimonial of any kind concerning the investment adviser or concerning any advice, analysis, report or other service rendered by such investment adviser."

However, some rules are not as clear. For instance, if an RIA lets visitors to its Web site rate a blog post on a five-star system, could that somehow be construed as a testimonial? Do the client comments constitute advertising that must be archived? Or if a tweet offers no commentary by a registered representative and is just a link to a Web site with information about financial planning, does it need to be reviewed by a broker-dealer? The rules are not as clear on some of these fine points.

In the meantime, registered reps are clearly at a disadvantage, since some B/Ds are simply banning the use of certain social networking sites. Many have forbidden the use of Twitter or blog-writing by their reps.

Click here for more on compliance and social networking, see a recent Webinar I hosted with experts from MarketCounsel.  

Andrew Gluck, a longtime writer and journalist, is CEO of Advisor Products Inc. (www.advisorproducts.com ), a Westbury, N.Y., marketing company serving 1,800 advisory firms.