The popularity of online communities and sharing information via the web continues to seep into the financial industry, and now Reuters is taking advantage it.

At the end of this month, Reuters is launching an online community website for financial advisers called AdvicePoint. Investors looking for an adviser will be able to use specific search criteria, such as an adviser's location, assets under management and client niche.

"It's a combination of Facebook meets YouTube all combined in one for the wealth management industry," said Scott Parry, general manager of AdvicePoint in White Plains, N.Y. The overall concept connects investors with financial advisers, and financial advisers with service providers that support their practice, he said. "It's an eHarmony model of better profiling advisers," he said, referring to the dating service which rigorously screens people for compatibility.

Advisers can register and create a profile based on such information as assets under management, growth of business, client niche and other specialties they offer. Every profile is free, but advisers who wish to use more tools and products can upgrade for a fee. Fund companies can create profiles as well.

Parry explained that Reuters looked into buying existing technology to implement the site, but ultimately created its own proprietary system because existing technology did not have categories he and his team were looking for.

Advisers also have the ability to link profiles. For example, if five advisers work together they can have links to all their profiles on their page. Also, advisers frequently work with attorneys and accountants, and they can link them in also.

Enhancements will be made to the website over the next few months. On Oct. 31, advisers will be able to add attachments to their profile such as a PDF document, video or podcast. In late December, blogs and forum tools will be implemented, as well as a mutual fund screen tool, where searches for mutual funds can be done using Lipper research.

The website combines the use of web 2.0 tools such as blogs and forums and also traditional products, Parry said.

"This is a brilliant idea for advisers," said Jim Atkinson, CEO of Guinness Atkinson Asset Management in Milwaukee. It is difficult for investors to discern information on how to find an adviser, and anything to help them with the process is a good thing, he said.

Nate Wenner, a financial planner at Wipfli Hewins Investment Advisors in St. Paul, Minn., said he would be interested in learning more about AdvicePoint. He has a LinkedIn account and has met clients and potential clients through the website. More colleagues and clients are using networking websites such as LinkedIn, and "I've tried to be responsive and have been building an online presence over time," he said.

There are some questions as to how much information advisers would be willing to disclose on the website and how much firms would let them share, given regulations and compliance requirements.

"We understand that not everyone will be able to take advantage of all features," Parry said. Under compliance mandates, Parry does not expect any registered representative to create a blog, as companies probably won't allow it since it's too difficult to monitor.

The strategy among asset management firms is to not go too far and give away secrets of the trade. However, they can use the websites to do self-promotion, such as indicating how well they built a portfolio or their client base, said Rodney Nelsestuen, senior analyst at Needham, Mass.-based TowerGroup in the financial strategies and IT investments cross-industry group.

The launch of Reuters' AdvicePoint comes at a time when social networking and online communities are increasing in popularity.

"The social networking online phenomena is here to stay and it will continue to grow," Nelsestuen said. "With any emerging market, however, it will be fickle, and there will be changes going forward."

There is a real move to engage people on a different level and offer services through a third-party site, Nelsestuen said.

Websites such as LinkedIn gives employers the opportunity to establish relationships with professionals in other countries, expanding their book of business. Also, it is a valuable tool when looking for a job or keeping in touch with associates, Nelsestuen said.

There is a lot of interest among companies to look into creating an internal social communications network versus using public websites such as Facebook or Myspace, said Irwin Lazar, principal research analyst and program director of convergence and collaboration at Nemertes Research in Mokena, Ill. This way, people can ask questions of colleagues and view upcoming events on the site, he said.

However, not all firms are jumping on the bandwagon of sharing information via social networks. Financial companies are concerned about what people are saying on the Internet and they need to make sure that there is no insider trading or endorsement of stocks taking place, Lazar said.

Mutual fund companies and other financial firms must be cautious about the content they put on websites, Nelsestuen added. In a regulated industry, people need to watch what they say online and make certain they are not making misleading statements, he said.

For consumers, there is an issue of reliability. In the past, traditional company websites could be trusted, and now people need to really assess where the information is coming from, Nelsestuen said.

(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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