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Financial Firms Take to Facebook, Tweeting

Even the most conservative asset management firms are finding it hard to resist lure of social media.
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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











, according to research by the analysts at

Corporate Insight


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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


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.


is cited as "the first, and only firm, in the asset management space to develop its own online communities," first with and, more recently, its TC Listens community.

Franklin Templeton


Putnam Investments


The Hartford

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and Vanguard offer blogs. A growing number of asset management firms may use Facebook and Twitter profiles to target clients and prospects, but




MFS Investment Management


New York Life

go the added step to direct their posts toward financial professionals.

Despite initial steps into the medium, McGovern says many of the firms they track "do not appear to have a clear strategy for gathering fans and followers and leveraging these social media efforts." The majority of firms employ a single, general-interest profile on Twitter and Facebook to drive traffic to their websites via links to market commentaries, educational articles and tools.

Of the 16 firms Corporate Insight tracks that are using Twitter, only one-third use their profiles to interact regularly with their followers. Despite the growing number of banks, brokerages and credit card issuers using Twitter as a customer service channel, only two asset management firms have used their accounts to provide customer assistance, and even then in a limited capacity.

One area where asset management firms are innovating, however, is with blogging. Mutual fund companies, in particular, have embraced the medium, McGovern says.

"Blogging makes a lot of sense for mutual fund firms," McGovern says. "Many leading fund managers have clear and strongly held views on the investment prospects of specific markets, industries and companies. Investors and financial advisers might find a lot of value in reading these views, especially if they're updated on a regular basis in response to events."

Although strict regulations may hold a firm liable for information published on its website, asset management firms have worked within the parameters of regulatory statutes to allow users to post comments, retaining the social nature of a blog, McGovern says. Putnam and Vanguard allow users' comments with pre-approval, publishing remarks from investors and advisers only after the firm reviews and grants their approval.

Rather than offering a generic company profile,






have taken the more offbeat approach of using "spokespeople" from advertising campaigns in their social media outreach. The "World's Greatest Spokesperson" Facebook page from Nationwide and the "@AXA_Gorilla" Twitter profile try to stand out from their peers by using humor.

McGovern sees the growing pull of social media as "marketing 101."

"You want to go where your customers, and your potential customers, are," he says. "Facebook passed


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in March of this year as the most visited website in the country and it has 500 million registered users, which is about 10% of the planet's population. It is also no longer just a Generation Y thing. It is increasingly popular with older investors , with grandparents as much as it is with college kids. Companies have a reason to think a little harder about whether it is still safe for them to turn their noses up at this and treat it like a fad. If you look at the top 20 websites in the U.S., by traffic, nearly half of them, in some way, are related to social media."

-- Written by Joe Mont in Boston.

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