This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Financial Advisors Fall Short on Social Media

Stocks in this article: LPLA SCHW

NEW YORK ( TheStreet -- Financial firms that embrace social media now can get the inside track on the competition as most companies resist using the tools.

According to a recent report by Aite Group, 84% of advisor firms prohibit the use of social media, citing compliance concerns. But that could change as the advisors that do use social media on a professional level say it helps them with prospecting and makes their business more visible.

Still it appears the advisors themselves are more aggressively using social media as Aite's research found: "More than one in four RIAs registered investment advisors use Twitter, while one in five maintains a blog."

Some brokers like Vincent Esposito have gotten so frustrated over the inability to use social media tools that they have walked away from traditional brokerage firms in order to grow their own businesses and stay current.

Esposito went off on his own so that he could have more freedom to send tweets and prospect clients online. He maintains that he operates within regulatory guidelines and is careful about how he uses the tools.

Esposito believes using social media will be vital to his business in the future and in order to keep his business growing, he felt he had no choice but to strike out on his own. He is equally certain that the old fashioned ways of dinosaur brokers will have to change with the times.

Schwab (SCHW - Get Report) is one of the brokerages that attempts to be social media friendly. The company has a variety of Twitter channels it uses but only at a corporate level. Its brokers are clamoring for more access to use these tools, but Schwab says it hasn't given permission as of yet.

"Over time the rules will become more clear and the functions better understood," says Lindsay Tiles, a spokesperson for Schwab, "Everyone is trying to analyze it now."

Stephanie Sammons of Wired Advisor, which consults with financial firms on e-marketing strategies, says she knew wirehouses would not let advisors get involved right away.

"It's not that different from when e-mail arrived," says Sammons, recalling how long it took for wirehouses to allow brokers to converse with clients via e-mail.

The firms frequently cite compliance and regulatory concerns and it's a fair argument. FINRA has clear rules and guidelines when it comes to advertising and client communication.

However, when the topic turns to social media, the guidelines become a more grey. As example, FINRA sees a static posting as advertising and a principle has to approve the posting beforehand. But if there is interactive communication, then it doesn't require approval. Most blog sites have a comment function, making them interactive. But what is it when a broker posts content but then no one comments? Is it considered static or not? FINRA says the sites are both -- static and interactive. That certainly clears things up.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs