BOSTON ( TheStreet) -- After considerable foot-dragging and regulatory confusion, asset management firms are finally exploring and exploiting the world of social media.
Even the most conservative mutual fund firms and annuity issuers are starting to experiment with such sites and services as Facebook, Twitter, YouTube, MySpace, LinkedIn and Blogger.com, according to research by the analysts at Corporate Insight.
Corporate Insight found that 45% of the asset management firms it tracks are employing social media in some form. A previous study, in 2008, found asset management firms were less likely to use social media than banks, credit card issuers and brokerage firms. At the time, just 13% of mutual fund firms and 17% of annuity issuers had a corporate-sponsored Facebook presence.
"Very few firms were doing anything at all," says James McGovern, vice president of consulting services at Corporate Insight. "Facebook and Twitter were not as big or important as they are now, and a lot of companies were not willing to go out on a limb and start a blog or investor community."Today, of the 41 asset management firms Corporate Insight tracks, 17 now feature company-sponsored pages on Facebook and 16 are tweeting on Twitter. Four firms have also launched blogs. What's changed in the past two years? Aside from the rapid rise to ubiquity by these social sites, Financial Industry Regulatory Authority, the overseer for all securities firms doing business in the U.S., published Regulatory Notice 10-06. That dull-sounding document helped resolve many of the regulatory and ethical quandaries firms had about social media strategies. Among the matters addressed were the rules for storing communications made through social media sites, how firms supervise representatives using blogs and what restrictions should be placed on personnel creating an account with a social media site. "Publishing more concrete guidance on what you can do, and what you shouldn't, in social media has inspired many firms to take a shot," McGovern says. "It comes down to such issues as defining the static content on a Twitter page as an advertisement, so you have to have your attorneys look at it and make sure it meets the standards for advertising. FINRA had offered some guidance over the past few years about electronic communication and using the Web. By talking specifically social media, it was a green flag to the industry." Corporate Insight lauds Vanguard as "the social media pioneer" in the asset management space, providing a model for the industry in its use of Facebook, Twitter and the company's "Vanguard Blog," which was one of the first introduced by a mutual fund firm when it launched in February 2009. TIAA-CREF is cited as "the first, and only firm, in the asset management space to develop its own online communities," first with Myretirement.org and, more recently, its TC Listens community.