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Five changes to expect in social media in 2010

Expect asset managers to play major game of catch-up in modernizing web marketing

Author Pat Allen Guest Columnist January 4, 2010 at 5:49 AM
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Pat Allen: The assumption was that someone would come to your site and take the time to browse it. Oh no, they won’t.

Tim Bosworth

Tim Bosworth

January 4, 2010 — 11:04 AM

Very interesting and thought provoking. They resonate with me.

Nat C

Nat C

January 4, 2010 — 6:33 PM

Thanks for sharing your well thought out social media predictions.

Stephen Winks

Stephen Winks

January 5, 2010 — 1:33 AM

The power of Social Media is that it presumes a dialogue between advisors and vendors that presently does not exist in the financial services industry.

Vendors typically have been only interested promoting their product or service with no value ascribed to listening to the marketplace and becomming more responsive to the needs of the consumer or measuring client satisfaction, which is of course the very definition of marketing. In consumer goods companies like Proctor and Gamble, their entire marketing program is geared to consumer satisfaction trying to uncover new and innovative ways to compete. This does not exist in the brokerage industry, otherwise every broker would be held to a fiduciary standatd. The thought of the broker acting in the best interests of the consumer and soliciting and being responsive to investor opinion is not possible until the broker can act in the best interests of the consumer fulfilling their fiduciary obligations.

If the consumer requires the industry to be accountable, transparent and concerned about cost which are presently not important in conventional commission sales, advisors may love it but it is difficult to see that brokerage firms and custodians that support brokers would be responsive. Thus social media could well be mechanism that will move the industry to do the right thing. Is it the change agent that engages the consumer and the advisor that moves the industry to take the steps necessary to restore the trust and confidence of the investing public? It would be nice, but as Harvard’s Clayton Christensen suggests, when well established firms face transformational innovation (fiduciary standing) the most common mistake made is the innovation is viewed in the context of the existing business model when a new business model is in order.

I hope Social Media becomes an important change agent, but that presumes the industry is a willing listener. The question is why should we expect anything different from product vendors, who have not here-to-fore been interested in the best interests of the consumer. The product distribution culture which maintains no investment advice is being provided is incompatable with the advisory services culture focused on advice and fiduciary standing. When the industry is moving toward process that address and manage investment and adminitrative values rather than product sales, an entirely different portfolio construction discipline is required than that advanced by commission sales. Fiduciary standing values the advisor acting on behalf of the consumer in managing cost, providing accountability and transparency not possible in commission sales.


Les Abromovitz

Les Abromovitz

January 5, 2010 — 1:36 PM
I learned a great from reading Pat’s article and was impressed by her insight. I can attest that very few people in the compliance field are comfortable with marketing campaigns that rock the boat. Perhaps, however, compliance personnel are not rejecting a social media strategy, but are simply insisting on parameters to help avoid violations of the Investment Advisers Act.

As an example, a social media strategy should not move forward unless policies and procedures are in place governing the use of LinkedIn, Facebook, blogs, Twitter, YouTube, and other forms of online communication. RIAs should also possess the ability to retain these communications and advertisements in accordance with the Books and Records Rule. Although Pat is right that communications using social media are more intimate, keep in mind that a securities regulator may one day be reading them.

Pat predicts that marketing communications writers will be “tasked with writing search engine-optimized copy.” Don’t forget, however, that this content must comply with Rule 206(4)-1 under the Investment Advisers Act and may not be false or misleading in any way.

Les Abromovitz, National Compliance Services, Inc.

Brian Byrne

Brian Byrne

January 7, 2010 — 4:38 PM

Clearly, there are reputation, security and compliance risks in the use of the mainstream, consumer-focused social media tools. We at linkedFA.com believe that a purpose driven social media site, created specifically for financial advisors, will allow you to get the best social media has to offer in developing your business, while protecting both you and your client’s privacy and security. www.linkedfa.com addresses FINRA compliance rules for financial advisors.

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