Many financial advisory firms are trying to find the right technology solution, and a big factor is social media .

Of the 75 technology companies represented at the T3 Conference, Smarsh and Arkovi are among the companies offering tools to help advisors be active in the space.

Blane Warrene, the CEO of Arkovi, and James Douglas, a senior account executive at Smarsh, offered some insights from the conference in Weston, Fla.

Where is the Industry at?

Like with any technology, there are early adopters.  Social media is no different.  Warrene said he is now seeing the second level of users moving forward.  “These people want to understand it and construct a plan first,” he said.  “Some just don’t know where to get started.”

Of those starting the process, 2010 was a year of research and planning, and 2011 is now a year of action, with companies committing budget dollars in this area, some for the first time.  “Last year they were listeners,” said Warrene, who admits that in mid February his company has already had the firm’s best quarter yet.

Douglas agreed. “We have also seen social media growing steadily since 2009.  Being at several conferences, like this one, helps us also identify trends and there is definitely a bigger buzz.  We are seeing that a lot of firms have increased interest with what others peers are doing.”

What About Regulation?

With recent news from FINRA and the SEC, it is clear regulators are going to take a bigger role in social media monitoring.  Social media is here to stay and it seems they are now doing a better job taking charge.

Regulators could light a fire under some firms that have been sitting on the sidelines, with no-use policies.  Both Douglas and Warrene said that they see firms like this all the time that say their advisors are not using social media, yet a simple Google search shows that is far from the truth.

“The SEC sweep letter opened everyone’s eyes to the need to be in compliance if you are using social media,” said Warrene.

Douglas agreed. “FINRA has made it clear that social media is a priority for examinations this year.”

Warrene gave a warning, saying, “We are not aware of specific fines, but it is certainly a possibility.”

Douglas said, “When FINRA makes announcements it is better.  It is often the uncertainty that keeps advisory firms away from using social media.  The clearer the rules, the better.  For example, it is very clear with email, but that wasn’t always the case.”

Staying Current

One challenge in keeping up is the constant enhancements that Facebook, LinkedIn and Twitter make.  “All new data fields, become an extra way to capture info and have guidance,” Douglas said.

Warrene said, “We have a year-long roadmap for our technology enhancements, but if we get one big change in the industry like Facebook does, our developers are left scrambling overnight to keep our offering current.”

Although they hope there will be more transparency from the big firms, Facebook, Twitter and LinkedIn, they know that is not likely to happen.  Just like when Apple roles out a new product, they do not want to let the cat out of the bag early, so Arkovi, Smarsh and other providers of this service will have to continue to jump through hoops at the drop of a hat.

Industry Trends

“Advisors are tuning into the fact that their clients are using social media.  Those clients have intimate relationships with advisors and social networks are a way they are starting to ask to better connect,” Warrene said.  “Simply put, it is a new way to stay in touch with clients.”

He also shared that they have information showing that 80% of social media activity from advisors tracked in their system is coming from Facebook and Twitter.  Maybe these tools are serving as better communication vehicles… or maybe advisors are just not taking advantage of LinkedIn.

What Do Advisory Firms Need to Do?

Smarsh delivered a presentation to advisors educating them on how they need to push forward.  Step one is to set a policy.  “Before you start, you need to have clear guidelines,” Douglas said.  “Social media technology is one thing, but social media policy is really the starting point.  The next step is training – firms need to rely on internal experts.”

Douglas went on to say, “Some components like archiving, pre-review, and feature controls help make sure the enforcements keep up with the policy.  Each policy should be enforceable and reasonable.”

Warrene added that internal polices need to adapt over time, stating, “Policy is definitely organic.”

Why is Social Media So Popular?

“It amplifies the voice of the individual,” Douglas said.  “Social media can have an immediate global audience – it can reach the world.”  He mentioned recent uprisings in Iran and Egypt and the role that the social networks played.

While those are interesting case studies, advisors are probably not trying to change the world.  However, they do want to grow their businesses.  Along with extending an advisor’s reach, Douglas gave two other benefits, “Immediacy is a wonderful feature and social networks are easy to use.”

Things Are Changing

Warrene had a conversation with a firm attending the conference that had not been using social media. Just recently they hired a new marketing person from another industry that had been taking advantage of the tools since 2007 and knew how to effectively use social media in integrated marketing campaigns.  “The firm has gone from 0 to 60 in no time, going from using no social media to all of it – LinkedIn, Facebook, Twitter and a blog,” said Warrene.

Yet, even with the success stories, there is still a contingency of advisors that are with broker-dealers that are still not adopting a policy.  Warrene said, “The advisors I talk to do not like being on the outside looking in.”  In networking at the event with other advisors that can use social media, it is likely those at a disadvantage will raise their levels of frustration when they return home.

What’s in Store?

“We are very encouraged to see where social media is and how much it has grown,” said Douglas.  “More firms are opening up their policies, or at least beginning a dialogue.”

Warrene said, just by being at this conference and sitting in the speaker sessions, “we have been excited to see the explosive use of mobile technology.  iPad and mobile devices are a gateway to social media – that has proven to be a new way for advisors to find themselves getting started with Twitter, Facebook and LinkedIn.  It will be an industry driver for compliance tools.”

As an industry, social media usage is behind most others, but there are signs changes are ahead.

Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful.  His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas.  Read more at

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