Advisors Going Social: Gaining Clients While Remaining Compliant

FAs say social media drives new business and builds relationships.
By MainStreet Team ,

By Hal M. Bundrick

NEW YORK (

MainStreet

)--Nearly three-quarters (74%) of financial advisors believe that social media helps them increase assets under management, according to an Accenture survey conducted earlier this year. And nearly half (48 percent) are using Twitter, Facebook, LinkedIn and the rest on a daily basis to interact with their clients.

"The use of social media to interact with clients is a differentiator for advisors today, but it will be mere table stakes in the not too distant future," says Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services. "Wealth management firms that fail to adopt social media will miss an opportunity to build relationships with clients on their terms. This is becoming increasingly critical as investors are demanding online resources to help them better understand investment strategy and advice."

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Victor Gaxiola, a social media expert at Actiance, a developer of regulatory-compliant communications solutions, says advisors and firms need to have effective strategies in place to exploit social media while maintaining compliance.

"The adoption of social has turned the corner," Gaxiola says. "We are no longer hearing 'should we use social', but 'how' to use social to achieve business objectives. Further, having a social solution in place will attract the next generation of advisors that will be supporting the growing base of Gen X&Y investors that are expecting their providers to be connected on social media. Creating actionable social media plans that incorporate best practices, as well as an understanding of the compliance and regulatory requirements, prove the most beneficial."

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But the task at hand is more than frequent digital engagement with clients and prospects.

"The biggest issue that financial advisors are facing right now is effectively striking a balance between open, free communication and compliance checks and balances," says Gaxiola. "This issue can be broken down into several components: the need for training and education on compliance requirements, the tools to enable compliant communication and the policies to protect the firm in case of litigation, legal holds and eDiscovery."

Gaxiola says that from the firm's perspective, increased adoption of social media is ultimately driven by ease of use.

"The BYOD (bring your own device) movement really fuels this, as advisors are not always in the office," he says. "Allowing advisors to still communicate across their preferred digital channels requires a dedication to optimizing the end-user experience."

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And social media compliance, combined with the ever-changing lineup of popular social platforms, represent rapidly moving targets.

"With the ongoing additions to social networks and changes in APIs, such as the recent announcement of video for Instagram, it's important that any advisor using social media stay up-to-date on how these new features and updates affect their compliance practices," Gaxiola says. "While not every new social feature will be a major tool for advisors, it's imperative that firms keep their advisors aware of the social landscape and equip them to remain compliant as social communication continues to evolve."

--Written by Hal M. Bundrick

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