MIAMI - Social media has become an inescapable force, but many in the financial services industry are still holding back from using it.
“If you don’t use social media than your business will go elsewhere,” said Hadley Stern, Vice President, Fidelity Labs at Fidelity Investments, at the American Bankers Association Wealth Management Conference.
The fastest demographic on Facebook, Stern said, is women aged 55-65 – a huge chunk of many advisors client base. Currently, there is the biggest wealth transfer from the older generation to the younger generation, which leaves a huge opportunity for advisors to show their attributes to these newer clients and meet them where they are at: Twitter, Facebook and LinkedIn.
Facebook is the largest site by far in terms of time spent on site, Stern said, with the average user spending 55 minutes every two days on it.
“Deciding whether to get involved is deciding if you want to be part of the conversation,” Stern said. “There will be a conversation with or without you.”
The downside for many is compliance. “It takes five minutes to sign up for Facebook, but three to four months to make a social media plan that makes your legal and compliance departments satisfied,” Stern said.
It is clear that the regulators are watching. ¦In January 2010 the Financial Industry Regulatory Authority released a regulatory notice with guidance on blogs and social networking websites. In February, Joseph Price, FINRA senior vice president of corporate financing and advertising regulation, said a second Social Networking Task Force will meet in March and more guidance will be issued by the end of the year.
Meanwhile, in January the SEC began requesting information from some investment advisors as part of a social media sweep exam. According to the ACA Compliance Group, these items include: documentation of involvement in social media, such as Facebook, Twitter, AdvisorTweets.com, LinkedIn, LinkedFa, YouTube, Flickr, MySpace, Digg, Redditt, as well as any blogs; documentation of communication made by, or received by, an advisor on any social media website, such as blog postings, messages, and tweets; advisor's policies and procedures relating to the use of social media websites; documentation of any third-party use of social media that is maintained by the advisor. This includes communications posted by third parties on behalf of the advisor, as well as policies and procedures relating to these communications; advisor's policies and procedures relating to the personal use of social media by employees; documentation of an advisor's internal training and education programs for employees' use of social media for both personal and business use; documentation regarding any disciplinary action taken against an employee based on their use of social media; and the advisor's record retention policies and procedures concerning its involvement with or usage of social media, including record retention policies of the advisor, the advisor's employees, and any third-party utilized by the advisor to manage its use of social media websites.
Denyette DePierro, senior counsel at the American Bankers Association, said not only are regulators watching what is happening on Facebook and other social media sites, but there are actively engaged on the sites.
“Even if you’re not going to get involved with social media,” she said, “stay aware of the conversation.”
But many in the industry still find social media as an effective way to connect with and enhance their relationship with clients. At the recent TD Ameritrade Conference in San Diego, Christopher Van Slyke, a partner and co-founder of Trovena, LLC, spoke about how Facebook has been a boon for his business. “Why is Facebook the third largest nation on Earth,” he asked the packed room attending the Social Media Bootcamp run by Marie Swift of Impact Communications. “It’s not what you know, it’s who you know. Facebook allows you to leverage who you know. If your business is relationships and your relationships are better because of social media than it has helped.”