WASHINGTON, D.C.-Looking for the secret to social media success in financial advice?

Don't give any.

Not only does that avoid potential compliance issues with state or federal regulators - it's not what your existing or potential clients are really looking for on Facebook or other social networking sites.

Don't even try to pump a specific product, like a 529 college savings plan. The financial advisors and fund companies "I have seen who are really embracing this are actually steering clear of putting 529 pieces on there,'' said Art Metzger, vice president, advertising surveillance at AIG Advisors at the annual conference of the Financial Industry Regulatory Authority. "They're steering clear of anything like that. What they're really putting on there is sort of human interest stories.''

This can be, in his observation, promoting community events like a charity car wash or donating to cancer research. For Janney Montgomery Scott, a regional financial services firm, it was observing National Armed Forces Day. For Lon Dolber, chief executive officer, of American Portfolio Financial Services on Long Island, it was posting a photo on Facebook of his Hobie Cat sailboat, overturned in a storm, and urging "friends" there to attend a rock concert by his band, the Filthy Crickets, since there wasn't going to be any more sailing that summer.

And for Vanguard Group, the central topic used to promote its reputation as a provider of low-cost mutual funds, investing passively in the components of easy-to-watch securities indices, is ... coffee.

Promoted on its Facebook page and timeline is the At-Cost Café, a mobile van that shows "why costs matter."

The beverage truck made stops in Boston, New York, Philadelphia and Washington, D.C., in March, to get the point across to potential fund customers that markups make a difference to a pocket book.

Its "at cost" mutual funds, it says, are one-fifth the industry average. Just like the coffee it handed out, at 28 cents a cup.

And, oh, yeah, its average expense ratio of 28 cents on its funds just happens to be 20% of the industry average of $1.38.

The rolling coffee shop is what Shayna Beck, head of social media at Vanguard, would call a "social opportunity." It's a vehicle, literally, for establishing new relationships, through a combination of online and, in effect, in-person interaction.

Which, in turn, becomes a business opportunity.

"We want to align what we're doing on social (media sites) with what the business objectives are,'' said Beck. "Educating investors is the number one Vanguard objective.''

Spurred on properly, social media sites can be used to foster discussions among followers on, say, the proper way for parents to set up allowances for their children or figure out the best ways to allocate investment money among different types of assets as you grow older.

But, in the main, Facebook, with 865 million or more users worldwide, is not where you want to put specific information on products or services being offered to the public. That's best kept (and controlled) on financial services' firms main web sites, said W. Hardy Callcott, a partner at Bingham McCutchen who concentrates on regulatory issues affecting broker-dealers, investment advisers and mutual funds.

Discussing a mutual fund on a social media site would require disclosure to regulators and clear tracking of what was posted, he said. If possible, stay away from product-specific discussions, as well.

Practically speaking, it can be costly, as well. If you're posting eight times a day, five days a week, to your Facebook page, for instance, "it can get quite expensive filing with FINRA,'' said Beck. Stick, she said, to basic financial principles or social interaction and away from product-specific comments.

Which may seem counter-intuitive. When AIG Advisors got started, it had 3,600 pieces of pre-approved content ready for its financial advisors to share on social media sites, bought from a third party. Some it filed with FINRA Advertising, just to be safe.

And it expected its financial advisors to be pushing products and services. Of promising things like "guaranteed 14% returns,'' that could get it in trouble.

"We were really nervous about this,'' said Metzger.

But the traffic pulled in was wholly unexpected. "When we started piloting it and we saw what was coming through, we started to ask, 'Are these the right people or are these people from outside the company just syncing up to our system?'''

In effect, the visitors that come to social media sites are trying to size up the financial advisor or fund firm. To see if it's a person or company worth doing business with.

Janney Montgomery Scott just got on Facebook on February 29, notes senior vice president Karen Shakoske, its director of marketing communications. But one of its objectives is to see if interaction on social media sites can reduce the selling cycle.

Going in, she watched one socially-media induced waltz with a representative take about nine months to come to fruition. It took the potential client that long to determine for herself that the agent was knowledgeable, responsive and not going to just push product.

She has little doubt that even its baby steps into social media will pay off. Right now, its page only has 120 followers. But the effect of social networks - where each follower is connected to another set of followers - means that whatever influence Janney has on those 120 individuals can extend to 37,810 others.

And the trick is to recognize that a response (or a retweet, on Twitter, for instance) can come from and go anywhere at any time.

But when they show up on your doorstep, they're coming, in effect, to get to know you, more than any particular product.

"It's been an eye-opener," said Metzger. But, at the same time, not surprising.

"In the end, people do business with people they like,'' he said. "This is a relationship business and that's never changed."

Done right, though, you might even make your rivals envious, in the connections you make and relationships you establish.

After the At-Cost Café made a stop at Vanguard's headquarters in Malvern, Pa., on its way to Philly, there appeared this response from a friend on its Facebook page:

Chris Baskerville: I wish you would visit my workplace in La Jolla CA. We're with Fidelity and pay $2.00 for a cup of coffee.

March 22 at 12:19pm• Like

SOCIAL MEDIA PRIMER: Do's and Don'ts From Financial Industry Regulatory Authority annual conference


* Use your Facebook timeline to tell a rich story about your company and how it has developed, from its start. Use imagery, not just text.

* Use Twitter (and Facebook) as customer service channels, particularly in emergencies or crises.

* Test run how you will use Twitter and Facebook, in case of a trading system outage or Web site failure.

* Test run worst case scenarios. What if your Facebook page gets hacked? How do you regain control?

* Use middleware service to archive all Facebook, LinkedIn, Twitter and other social media communications.

* Budget, carefully. Compliance costs are significant. Staffing costs are significant. Decide how far you want to go.

* Get all needed parties involved. Legal. Business. PR. Marketing. Compliance. Information security. Information technology. Human resources.

* Use analytics provided by the sites. You can figure out the industry and functions of visitors to LinkedIn, for instance.

* Keep at it for six months. Then start to measure.

* Train, train, train. Managers, employees, everyone.

* Preview what you can.

* Supervise what you can't.

* Establish procedures for interaction.

* Follow them. Keep track of how you did follow them.

* Find a teenager. Watch how he or she is communicating. Next year: Find a different one.


* Use Twitter to communicate about products. There's no room for disclosure statements.

* Allow the "recommend" feature to stay in use on LinkedIn. If one of your advisors or employees recommends someone, it can be construed as a marketing recommendation and subject to regulatory review. It's a testimonial.

* Put a social media site reference into the signature block of your e-mail messages. That will be considered "business communications" and subject to review.

* Ditto on business cards. Keep off the social media links.

* Send links in tweets, unless pre-approved. If it's to a site with constantly changing content, like wsj.com, it's probably okay. But to a specific article? Be careful.

* Get involved in any other forms of recommendations. If you retweet someone else's recommendation, you're still probably responsible for it.

* Rush into creating apps. Make sure you know who owns the data.

* Get agitated by complaints. Use them as conversion opportunities. Listen. Respond.

* Get too fancy. Make it easy for both the socially savvy and socially unsavvy visitors.

* Make operations complicated. Your advisors and employees may not be technically oriented.

* Forget. Once it's out there, you can't pull it back.

SOURCES: Panels on "Social Media Compliance,'' "Social Media Implementation" and " Social Media Networking Trends and Developments.''

LINK LIBRARY: Social Media References

Vanguard Group timeline


Go to "started" link on the chronology.

Vanguard Non-Financial Advice

http://www.facebook.com/photo.php?fbid=10150830208399736&set=a.194475594735.1253 57.69679664735&type=1&theater

Vanguard At-Cost Café site


FINRA Regulatory Notice 10-06


FINRA Regulatory Notice 11-39


Massachusetts Social Media Guidance


Federal Trade Commission Consumer Privacy Report


National Labor Relations Board Social Media Report


Employees have a right to talk to other employees about terms and conditions of employment.

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