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Advisory firms use of social media has come a long way

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The fact that investment bank Goldman Sachs Group Inc. is using the photo-sharing app Snapchat to recruit young employees should nudge any financial advisor still hesitant about using social media to finally embrace it.

And according to a recent study from Putnam Investments, more than 80% of the advisors it surveyed said that they use social media for their business, reflecting how firms are finally figuring out the regulatory boundaries for communicating online.

The asset manager’s study, done in collaboration with research firm Brightwork Partners LLC, breaks down how advisors have taken to social media.

Advisors use Facebook to build their brands and enhance client relationships; LinkedIn for referrals and to connect with other financial professionals; and Twitter to build their thought leadership platforms and expand their professional knowledge. Additionally, the study notes that advisors are using social media increasingly to gather their business news and information.

Although Putnam’s numbers come from a survey of just 817 advisors, these numbers appear to have some merit.

Another study this year by Cogent Reports surveyed more than 200,000 advisors and found that 77% of them used social media in their daily work.

Advisors’ usage of social-media includes platforms such as Pinterest, where they can showcase lifestyle-oriented content to their clients and potential clients, says Mark McKenna, head of global marketing for Putnam in Boston.

“Advisors used Pinterest to share experiences and tips like what wines to use at a dinner or cycling routes they preferred,” he says.


A more business-specific trend among advisors found by research firm Celent comes in the form of social trading, a hybridization of social networking and online brokerage sites.

“Social trading enables its global users to share local market information with each other in real time, thus democratizing information. It provides an individual with relatively inexpensive, expert-led investment guidance, while allowing him or her to maintain control over investment decisions,” according to Celent.

“This concept of crowdfunding knowledge via social trading is presently targeted to those who are exclusively self-directed,” according to Celent.

“However, advisors and traditional wealth managers would be wise to improve their personal (and not simply corporate) presence on social-media platforms,” according to Celent.

Some firms have warmed up enough to the idea of social media that they have created official policies. Wells Fargo Advisors, for instance, hopes to have 5,000 of its 15,000-plus advisors using social-media tools next year.

Dominick Manaro, president of Executive Buying, a newsletter in Englishtown, N.J., that follows insider moves for investors, writes in an email: “I was a financial advisor for 12 years. In that time I never had a social-media account, mainly because most of my compliance officers wouldn't even want us to even have personal social-media accounts just because of the risk of running afoul of the regulations. Now it seems like using social media is becoming more popular even with compliance officers.”

Although firms continue to figure out their social-media approach, McKenna thinks that the use of social media among advisors has come a long way and that the early skeptics have come around.

“Advisors say that they talk with clients less, but because they’re posting more content, they feel more connected to them, as opposed to a quarterly financial call,” he says.

This story is part of a 30-day series on leading tech trends for advisors. It was originally published on Sept. 29, 2015.

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