CHANDLER, ARIZ. - Most broker-dealers and compliance departments are terrified of social media, but advisors cannot afford to be, Matthew Halloran a practice management coach at Peak Advisor Alliance said during the company’s Excell Meeting.

“Generation X’ers are starting to a make a lot of money and they are using these social media pieces to communicate,” he said. “Clients and prospective clients will look at you as a tech-savvy advisor if you know how to use these things.”

Halloran, who declared himself a “geek about social media,” said compliance officers are fearful of it because it is difficult to track and archive communications through Facebook, Twitter or LinkedIn. He said within the next six months, regulators will have guidelines in place for social media, so it is critical for advisors to get comfortable with these mediums now.

Halloran said LinkedIn is the most advisor-friendly social media interface right now and can be a great tool for “passion prospecting and better referrals.”

“Facebook is next … hopefully compliance will begin to understand it. … Twitter is hard. It is still tough to translate tweets into business,” he said.

Facebook is “wildly powerful for advertising and target marketing,” he said, but by intelligently using LinkedIn advisors can intelligently find good prospects. It all begins with creating a strong LinkedIn profile, Halloran said, and that can begin with using compliance approved materials that advisors are already using on their websites.

“When compliance gets grumpy, you can tell them that these are things that they have already approved in another medium,” he said. “This usually changes their perspective.”

Advisors need to carefully print all of their communications on LinkedIn, Halloran said. He said by “doing your own archiving, you can avoid some compliance headaches,” he said. “As long as you don’t say something stupid like guaranteeing returns or promising a 98% return on an investment, you will be okay. Just connect with people on a very ‘Regular Joe’ level.”

Advisors need to take all of their best clients and connect with them on LinkedIn. Then, Halloran suggested, advisors should ask their connection to help make an introduction to potential referrals.

“This is really powerful,” Halloran said. “I think it is really difficult for clients to come up with referrals on the spot. … But if you go through their LinkedIn profile you can prospect some potential referrals and make suggestions.”

Advisors should spend about two hours weekly on LinkedIn, he said. “This is a prospecting tool,” he said. “How long do we spend online looking at sports or goiong through threads? Have fun on the internet and learn something and connect with someone.”

Halloran said advisors need to get more web-savvy. This means listing their firm on Google Places and Yahoo Business, searching for themselves and their firms on a search engine monthly; and getting more familiar with different social media tools.

“Don’t let the web spin you,” Halloran warned. “You need to get control of this stuff. This is NOT going away. I am sorry.”

Check out another story from the Peak Conference: How Can Advisors Ask for Referrals?