“I'm telling them to connect to people they know already, then pick and choose who the right people are,” says Lauren Boyman, director of social media for Morgan Stanley Smith Barney (MSSB) in New York. “We're telling them to do this in a methodical way. But we're not instructing them to try and connect with Maria Bartiromo and see if that helps.”
After all, most broker/dealers are most interested in helping their advisors use social media to build their books of business — if they're accumulating followers and friends who have no interest in financial advice or who will never become clients or refer friends, what's the point? This qualitative look is the next layer of social media — and one that many firms will be examining in the year ahead.
Morgan Stanley is trying to track the impact that an advisor's use of social media has on his or her book of business. Currently, LinkedIn and Twitter are available to a pilot group of about 600 of the firm's 18,000 advisors. The hope is to open these channels to the entire advisor force in 2012.
But for now, Boyman and her team want to see how much impact social media can have on a rep's bottom line. To that end, the firm is asking its advisors quarterly how many new clients and assets an advisor has netted and how an advisor sees that affected by tweets and social media connections.
“We're not changing our system to see if a new account came from social media,” says Boyman. “There are a lot of metrics we can track from clicks and reach, and if people are re-tweeting and engaging with content.”
LPL Financial also encourages its advisors to be thoughtful about the kinds of messages they broadcast so as to attract specific users rather than just beat the general reader over the head with marketing messages. The idea is to be strategic, says Marissa Fox-Foley, LPL's senior vice president of advisor marketing.
“Content needs to be memorable and appropriate,” Fox-Foley says. “We're not going for mass appeal.”
That's because mass appeal is unlikely to bring in clients. To-the-point posts are much more likely to be re-tweeted or to attract a new prospect. “We've actually proven there's a high return on investment resulting from social media engagement,” says Clara Shih, founder and CEO of social media software firm Hearsay Social, based in San Francisco. “You can never prove causation but you can prove correlation, that a person is increasing the amount of money with a firm and staying as a loyal customer.”
Today most firms, concerned about staying compliant, control the kinds of posts and the specific messages that their advisors broadcast so as not to draw ire from regulators. But at the same time, many are realizing that having a voice, writing in a more personal tone, is what really attracts followers and interest. While social media is certainly a means to connect with clients and prospects — at its best social media is about growing a business. And clients often want a connection to a person — not a firm. Reps aren't likely to win new business if their posts are not thoughtful.
“We've actually encouraged them to use a personal voice,” says Todd Estabrook, chief marketing officer for Commonwealth Financial, in Waltham, Mass. “Some of our advisors who are super users may post something about the European debt crisis but will also post something about how proud they are of their son for his Little League Championship. Posting personal stuff allows you to build a relationship.”
While static content needs pre-approval, interactive conversations or posts on Twitter, LinkedIn, and Facebook can fly live in real-time for Commonwealth's advisors. Of course everything is captured by software and stored, as required by regulations; it can also be removed. Still, the company hopes that reps will flex their writing muscles. Commonwealth, like many firms, provides a library of messages and links that reps can post on their profile pages. But Estabrook says the company actually prefers they re-write these missives their way.
“We tell them these should be in your voice,” he says. “We think of [the library] as, ‘If you have writer's block, here are some ideas.’”
Eric Rehl, e-business manager at Robert W. Baird & Co. in Milwaukee, Wis., is running a small pilot of six advisor teams with Facebook and Twitter but is allowing them to post in their own style, with pre-approval, concerned a corporate voice would constrict reps. One result? One rep now has a $1 million prospect following her on Twitter.
“That individual was already a prospect before we used social media,” he says. “But now with that individual following her, she has one more touch point to prove she can provide as a financial advisor.”
Raymond James also wants reps to cultivate their own brands, but believes they want a bit more guidance in how to develop a social media presence. RJ offers a pre-set group of posts too, which it understands a rep may rewrite slightly — by adding their own URL, for example. That said, unsurprisingly, any true personal postings must be approved in advance. Yet that hasn't seemed to be an issue since rolling out LinkedIn, Twitter and Facebook to advisors in November.
“About 95 percent of our advisors want to depend largely on pre-approved content,” says Mike White, director of marketing and corporate communications for Raymond James, who noted 1,000 of the firm's 5,113 advisors signed up to open a social media account in the first two weeks.
Still White agrees that there's value in giving reps some flexibility to personalize posts in reaching a more targeted audience. “The pre-approval is something we're going to evaluate and see how the industry and regulators are looking at it over this coming year,” he says.
Merrill Lynch is also trying to relax some of its policies — even though it's in a very early stage pilot with LinkedIn, which it plans to expand to more advisors by the end of 2012. The company also realizes its FAs are likely using social media in their personal lives — and may have linked with clients already — so FAs can add their Merrill Lynch website information to their personal accounts.
“The world is such that business associates and clients are friends,” says Steven Samuels, managing director and head of advisor communications for Merrill Lynch Wealth Management. “But they cannot conduct business on these sites.”
Firms believe regulators are likely to ease rules on social media's use particularly as it grows as a communications channel. Already, 45 percent of social media users say their time on these channels reduced their use of email, according to a recent study from U.K. research firm Ovum.
And so even as some firms tiptoe into social media, they're keeping a close eye on which channels prospects and clients are adopting. One that firms are keeping a particularly close eye on is Google+, which allows users to segment followers into smaller groups and target messages just to each circle. While not widely adopted in financial services groups — or even among consumers yet — the ability to craft tailored messages to specific groups is an option many financial services firms like.
Raymond James, MSSB, Commonwealth, LPL and Cambridge Investment Research (CIR), all have Google+ on their radar. The New York-based Advisor Group even expects to allow their 4,800 advisors to add Google+ in the first quarter of 2012 in addition to Facebook, LinkedIn and Twitter accounts.
Adoption is also happening around YouTube, which has swiftly morphed from a music video site to a networking channel. Reps have started adding videos of seminars and presentations, with firms posting commentary for clients on the channel as well. “We are in a time when people, especially younger people, are engaging with online video to learn and do research,” says Mark Cohen, assistant vice president of digital media for the Fairfield, Iowa-based CIR.
Regulatory acceptance is likely to change and soon. “I don't have a crystal ball, but I can relate this to email,” says David Ballard, chief information officer of Advisor Group, who sits on the FINRA Technology Advisory Council. That council looks at how social media is being used, and whether there are enough best practices.
“When email first came out you needed pre-approval, and now its post approval on lexicons,” Ballard says. “Right now regulators are tightening up [social media] because they don't know how it will be leveraged for advisors and the business world. But this is where people are now going for answers. They're going to social media more than Google. And once regulators understand what it is, there will be adjustments.”