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Social media can be powerful, but handle with care

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Social media has become a big part of many financial advisors’ business models.

As Raymond James senior advisor Sacha Millstone, who has long used social media, especially Facebook and Twitter, to communicate with clients, puts it, “I think it’s essential for advisors to have a social-media presence. It’s another kind of marketing, and I can’t imagine being an advisor without that.”

But powerful and helpful as social media can be, some experts warn that it can also be overused or used incorrectly, in ways that can hurt a firm.

Matt Oechsli, principal at the Oechsli Institute in Greensboro, N.C., suggests one rule to follow: “You can discover a relationship online, but then you need to take it offline by getting in touch on the phone or in person.”

He cautions: “Sixty-percent of today’s affluent use Facebook, so you want to be connected to them, but keep it limited. As for Twitter, tweet but not garbage. If you send too much, you’ll just start having your tweets deleted or labeled spam.”

In a recent survey of nearly 800 advisory clients, all with at least $250,000 in investable assets, the Oechsli Institute, looking just at Linkedin, found that when an advisor has a strong online presence featuring just periodic useful posts, 36.8% of clients reported having a positive impression, another 57.1% were neutral and just 6.1% had a negative impression.

But when asked about their impression of an advisor who constantly posts such things as trivia, pictures and inspirational quotes, the numbers reversed, with just 1.8% reporting a positive impression, 30.4% having a neutral impression and a whopping 67.9% reporting a negative impression.

“People are enamored by social media, but it shouldn’t become direct mail. As an advisor you should use it very carefully,” Oechsli says.

“Advisors aren’t bloggers,” he says. “If you’re trying to become the next thought leader, you’ll end up wearing your clients out.”

Millstone, who is based in Boulder, Colo., pushes the envelope more, though she agrees “you can get addicted” to social media, and she limits her online time to between half an hour and an hour per day, and not during working hours.

She says connecting with clients on Facebook helps her know them better and can build the relationship.

“I don’t get into back-and-forth discussions, but I do let my clients know when I’m passionate about things,” Millstone says. “My clients know where I stand.”

For example, Millstone says that she is a proud feminist, and she writes about women’s issues on social media.

“If I write an article or a blog, I will tweet to promote it,” she says. “I use social media to help build a thought-leadership presence.”

Dave Lindorff spent five years as a China correspondent for Businessweek and has written for The Nation and Salon.com.

This story is part of a 30-day series on leading tech trends for advisors.

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