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FORUM MAGAZINE

IN THIS ISSUE

Editor's Letter – Kristin Doucet

This & That

Relationship Management – The Inheritors by Susan Yellin

Practice Management – Multidisciplinary Advising by Leah Golob

Practice Management – Demystifying Social Media by Geoff Evans

Tax & Estate Planning – Pets in Estate Planning by Doug Carroll

Corporate Insurance – The Tax Exempt Test by Kevin Wark and Glenn Stephens

The Small Business Client – Divorce Settlements by Gary Opolsky and David Louis

Leadership & Growth – Dissecting Leadership by Rob Popazzi

Advocis News

The Final Word by Greg Pollock

PRACTICE MANAGEMENT

Demystifying Social Media

While some advisors have successfully leveraged social media to help build their practices, others have altogether dismissed it as a viable business tool. Geoff Evans addresses some of the concerns advisors have about social media participation and explains the opportunities for growth within the advisory business

In October 2010, FORUM published an article entitled “Take It Online,” by Geoff Evans, which introduced advisors to social media, highlighting some of the risks of using social media and the ways that social media could help advisors achieve a variety of business objectives. The article also explored how social media could be used to not only enhance marketing initiatives, but also to build and maintain client relationships.

Two years have passed and the social media industry has grown immensely during that time. Does this mean it’s now safe to assume that advisors and financial services firms across the country have fully embraced social media and integrated it into their business processes?
Not exactly.

It’s true that more and more financial advisors are showing interest in using social media in their businesses. That interest, however, is heavily imbued with caution and peppered, perhaps, with a dash of fear.

Compliance Conundrum
It should come as no surprise that concerns about compliance continue to dominate the social media conversation within the financial services industry. Even with regulators more clearly defining requirements for social media participation, there is still resistance from advisors who are concerned about what they perceive to be a complex monitoring and approval process — one in which the risks appear to outweigh the rewards.

So is the social media compliance process a convoluted aggravation best avoided? While the compliance processes inside of individual companies will vary based on the expectations laid out by the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC), when it comes to social media participation it would seem that the compliance bark has been somewhat bigger than the bite.
Anecdotally, there haven’t been any reported advisor disciplinary cases related to social media use. In fact, the reality is that rules for advertising haven’t changed with the advent of online social networking sites: the same expectations for creating a brochure or a website also apply to social media.

Ultimately, when it comes to compliance, an advisor’s responsibilities for participating in social media are straightforward:

  • Any content that will be shared in a static manner (e.g., website, social media profile, blog post) must be pre-approved.
  • Any content that will be shared in a dynamic manner (Twitter tweet, Facebook comment, forum discussion) must be monitored.
  • A record of all posts must be maintained.

Thankfully, all three of the big social networking sites — Facebook, Twitter and LinkedIn — offer simple ways to track activity: Facebook offers a comprehensive activity log for tracking posts on a Facebook business page; Twitter offers access to a syndicated feed of tweets; and LinkedIn offers an activity report of participation through both your personal profile as well as individual LinkedIn groups.

Yet, despite the tracking features available on these sites that make it easier for an advisor to be compliant, many have been slow to adopt social media practices and incorporate them into their business.

Slow Uptake
In a 2012 Environics Research Group poll, half of 428 Canadian advisors polled had a negative perception of social media: 26 per cent said they don’t see the value in social media while an additional 22 per cent considered social media to be a compliance headache that is best avoided. This leaves us with a majority of advisors who are either unwilling or not interested in participating in social media.

Should this resistance concern the industry? It’s important to keep in mind that social media is a tool. Much like financial planning tools or client management tools, the need for social media tools will vary from advisor practice to advisor practice. In fact, not only will the need for social media vary, but the potential role of social media inside of a particular practice will also vary.
Herein lies the real problem we face with social media in 2012: social media isn’t being evaluated for its merits on an advisor-by-advisor basis. Too often, once an organization has approved the use of a particular social media tool, advisors leap blindly into the fray without having evaluated the need or without having considered their individual goals. Alternatively, other advisors choose to dismiss social media as a viable business tool without taking the time to understand the opportunities for saving time and money or making money.

Determining Needs
Before getting caught up in the hype and hyperbole surrounding social media, an advisor should first take the time to evaluate his or her current financial advisory practice. Determine your strengths and identify opportunities for improvement.

Consider each audience you need to communicate with on a day-to-day basis: clients, prospective clients, professionals, centres of influence, business partners and the like. Reflect on the different strategies you are currently employing to engage each audience. Are there any roadblocks preventing you from achieving an effective level of communication? Are you spending too much money marketing to prospective clients? Is your referral process not generating enough new leads? Does your customer service strategy leave clients wanting? Are you unable to connect with new centres of influence who can introduce you to new markets?

If there’s a gap in your communication strategy, then perhaps there’s a place for social media in your practice. Even if there isn’t a clear gap in your business, it might be worth considering the future value of your practice as a whole. If you are thinking about selling your practice in the near future, ask yourself which financial advisory firm might be considered more valuable: one with a thousand clients and a robust online strategy that is currently connecting the practice with existing and future generations, or one with a thousand disengaged and disconnected clients?

What it comes down to is building a desirable practice that meets your needs today but also considers the future needs of the practice once it changes hands.

Today’s Social Media Landscape
Over the last two years, all three of the main social networking sites — Facebook, Twitter and LinkedIn — have doubled in size. By the time this article goes to print, Facebook will have likely exceeded one billion users around the world. Not only have the number of users continued to climb, but the average age of users has also increased. According to a 2011 Ipsos Reid poll, forty-three per cent of Canadians aged 55 and older are participating in some form of social media.

Since “Take It Online” was published in FORUM in October 2010, two new social networking sites of note have been launched: Google+ and Pinterest. Google+ is, of course, Google’s attempt to not only reign supreme as the search engine king of the world, but to also compete with Facebook as the social networking site. If you ask the creators of Google+, however, they’re likely to insist that their platform isn’t actually a social network but, rather, an upgrade to Google whereby users simply inform Google who they are in order to receive a more personalized Google experience.

Google+ has been panned by most. Although Google’s social networking platform offers a few unique features such as “hangouts” — a free way to participate in online video chats — it is still difficult to sway nearly a billion people away from their friends and family on Facebook. It would seem that the real opportunities for participating in Google+ are to enhance your visibility in Google search results (since Google holds a special place for Google+ profiles and posts) and to more effectively leverage all of Google’s free online tools (which may or may not be relevant to most financial advisors).

Pinterest, on the other hand, is not attempting to replace Facebook or Twitter. Instead, it’s designed to complement these sites. Using Pinterest, users can share photos and images with ease. On the surface, this website may seem not seem like a tool that could help grow a financial advisor’s practice, but the real opportunities exist outside of the traditional marketing strategies.

Often advisors who use social networking sites view them as marketing vehicles  designed to attract new clients. However, this perception is shortsighted as it overlooks some of the more interesting opportunities. For example, consider your sales process. Part of helping clients to identify the most appropriate financial solutions is in uncovering their goals and expectations for the future. Being able to successfully help clients visualize their ideal future outcome can set a successful advisor apart from the rest.

Advisors can use a site like Pinterest to help their clients visualize and begin to commit to an altered future state. Consider the creation of a Pinterest “retirement visualization board,” where an advisor posts images of what different retirements might look like: travelling the globe, buying a lakeside cottage, spending time with grandkids, or touring the country on a motorcycle. So, rather than just asking open-ended question like “what does your retirement look like?” and hoping your clients have a clear vision of this,  you could send them to a Pinterest “pinboard” filled with retirement ideas and invite them to identify the images that most resonate. This process helps them to commit emotionally to the goal of retirement and also helps to facilitate your own discovery process.

The idea of an online visualization board is just one of many ways social media goes beyond being a simple marketing tool.

Where to Go From Here
There’s no point denying it — social media is here to stay. As the social media landscape continues to evolve — with new innovations popping up regularly — this constant state of change can be intimidating. However, this doesn’t necessarily mean you have to be up on all the latest social media trends and tools. The big three social networking sites — Facebook, Twitter and LinkedIn — will continue to grow and change as user demographics and expectations evolve. These websites are likely to be your best first step into the world of social media.

If you are just starting to explore social media or are looking for a reason to jump in, start the process by focusing on one or two areas of your practice that you would like to better align with your business objectives. Once you determine the areas you want to develop, you can then select the most appropriate social media platform you feel will enable you to accomplish those objectives. As you begin to realize social media success, you can explore other online tools and incorporate additional objectives into your overall business strategy.

Geoff Evans is founder of Social Media for Advisors and can we be reached through his website at www.socialmediaforadvisors.ca.