Financial advisers follow their clients into the world of social media.
Jude Boudreaux, a financial adviser based in New Orleans, tweets on everything from why stocks plummeted after the federal debt-ceiling increase to tales of his toddler daughter's exploits to professions of love for penguins.
He's also rubbing elbows with clients and prospective clients on Facebook and LinkedIn, and checking in on Foursquare, where users share their locations through mobile phones.
Mr. Boudreaux, a fee-only certified financial planner at Upperline Financial Planning, is one of a growing group of financial advisers who are embracing all kinds of social media to develop closer relationships with clients and gain exposure to potential clients, particularly younger investors.
"I've met people through Twitter I wouldn't have met otherwise," says Mr. Boudreaux. "Ultimately I'll get into people's consciousness, and when they're looking for a planner, I'll be the one they think of."
Advisers also are using social media to learn from and collaborate with peers and competitors and to expand their hiring pools—again, particularly when it comes to attracting younger advisers.
Room to Experiment
Social media is, of course, a double-edged sword—and especially for those in such sensitive businesses as financial planning. It's one thing for a baker to crow about his cupcakes on Facebook or for an athlete to talk trash about an opponent on Twitter. It's something else entirely for an adviser to talk business online; there are rules, after all, that govern advisers' public communications, to protect investors from being misled. And nuance—so crucial when discussing money and investing—can be lost in the social-media world.
Still, there's plenty of room for creativity. And many advisers are finding that they can help their business without even talking business.
Registered investment advisers working at small firms have probably been the most innovative, says Barry Schwartz, a partner at ACA Compliance Group in Boca Raton, Fla., a consultant for financial advisers.
That's because the Securities and Exchange Commission, which oversees registered investment advisers, hasn't issued any rules or guidelines specifically for the use of social media. (Be warned, though: "Our existing rules and guidance apply regardless of the medium," says SEC spokesman John Nester.)
By contrast, the Financial Industry Regulatory Authority, which oversees the brokerage industry, last year established rules for the use of social media, and has since issued additional guidance. That means the small registered investment advisers have felt they can "find their own boundaries, if you will, more than the broker-dealers that operate in a Finra environment, which has more formality," says Mr. Schwartz.
One boundary most advisers have established is to stop short of using social media as a direct marketing platform, a tactic that they recognize may cross regulatory lines too easily and in any case is likely to turn people away rather than draw them in. "You can't be the guy that shows up at the cocktail party and starts passing out fliers," says Mr. Boudreaux.
But advisers can raise their profile and cement relationships with an indirect approach, by using social media to get to know clients better and to show their own human side.
Getting Closer
For instance, Ted Kerr, managing partner at Touchstone Capital Inc. in Sewickley, Pa., says clients he has "friended" on his Facebook page have been following his efforts to adopt a three-year-old boy from El Salvador.
"It creates a relationship that would have been impossible before with a large number of clients," says Mr. Kerr, who also uses Twitter and LinkedIn. "Clients love hearing about it, and it's much more natural. You wouldn't submit to an advertising producer a piece of advertising to update the progress in an adoption."
The other side of that coin is learning more about clients by viewing their Facebook pages. The information gleaned may not only uncover mutual interests, but also may inform investment plans and even lead to new business.
If an adviser learns that his client dreams of sailing around the world or wants to build a new home, for example, he may mention those goals if the client hasn't already and work them into the client's retirement or savings plans. If an adviser learns that a client's son or daughter is going off to college, she may discuss bringing the child into her office to begin learning about investments or to develop an investment plan. Adding younger members of a client's family as clients themselves can help advisers ensure some continuity in their business for years down the road.
"It just makes a better bond with clients," says Carolyn McClanahan, founder of Jacksonville, Fla.-based Life Planning Partners Inc. "It helps me plan better for the client because I know them better, and if I do a better job planning for them, they're less likely to leave."
Mr. Boudreaux says Twitter and Foursquare help him stay engaged with clients. For instance, if a client he's close to checks in on Foursquare at a family reunion, he might fire off an email asking him how the event is going. "It shows you're paying attention to them, which is what our clients are screaming at us [about] all the time," he says.
Ryan Leib, vice president and co-founder of Keystone Wealth Management, an independent financial-services firm in Alpharetta, Ga., notes the power of linking Twitter, Facebook and LinkedIn as he has, so that the messages he posts on one site automatically appear on the others. "When you can touch Twitter, it's followed on Facebook and LinkedIn all at once, then you're connecting with more than 500 people. Then it's retweeted and that just spreads it."
Ms. McClanahan, a former physician who speaks around the country on health-care reform, also indirectly promotes her firm by tweeting on health-care issues. "I don't think that would ever get me a client directly," she says. "But when you're out there and commenting on things, people see you as being active and participating in the world as far as making it better, and that makes your firm look better."
A more direct benefit is the connections advisers can make with peers and other professionals through social media.
Robert Siegmann, chief operating officer and senior adviser at Financial Management Group Inc., a fee-only financial planner in Cincinnati, says he has gathered valuable information for his firm on LinkedIn.
FMG wants to expand by becoming the financial adviser for a small to midsize company in the Cincinnati area, and once it decides which company to target, the initial approach will be made through that company's human-resources director, Mr. Siegmann says. So he follows several human-resources groups on LinkedIn to gain a better understanding of the challenges HR professionals face and how to speak their language. He figures that will prepare him to approach an HR director in a way that wouldn't be too aggressive and would be seen as helpful and objective.
He's also chatting with both peers and competitors in various online industry groups, discussing anything from what type of software they're using to whether they're trading certain stocks. And, as a member of several local LinkedIn groups, such as University of Cincinnati Alumni and the West Chester-Mason networking group, he has even come across a way to support a client's business. In the group discussions he pitches in when someone asks, "What's your favorite Italian restaurant in town?" or "Does anyone know an arborist in the area?" "One of my clients is an arborist, and I sort of plugged him," he says.
Perhaps most importantly, social media are vital to advisory firms that want to draw younger clients and advisers, Mr. Kerr in Pennsylvania says. "You used to meet people at the country club. Well, how many young people are at the country club today? They're all online; that's where the payoff is."
read more: Olympus Wealth Management
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