Top social media myths in the financial industry

Financial Marketing and Communications firm Ledermark, recently released a survey on financial services professionals use of Social Media to network and gain business. The findings are interesting and I will quote many of them here. The more interesting part is that it got me thinking about all the social media myths floating around out there across the financial sector.

Without the correct information I don’t believe this space will be able to fully realize the potential social media has to offer. So in an effort to clear the air on these topics let’s dig in.

Myth #1: Financial professionals are not using these tools unless the firm allows it.

Ledermark found that “85% of financial services professionals under 50 are utilizing social media.” That is a huge number! Contrast this with the fact that 54% of US businesses currently prohibit use of social media, according to Robert Half Technology and nearly every day we talk to another firm that blocks access. Something just doesn’t line up. Based on my experience and the data from Ledermark, the real story is that firms are prohibiting access while they figure out the compliance issues. However, individuals are ignoring those policies.

You might say they are just on these social networks for personal use. I suspect there are firms that will believe this, but consider that these sites are one of the greatest networking tools the world has ever seen, it is the easiest way to connect with old friends, classmates and colleagues, they are free to use and they are already taking advantage of them for their personal life.

Financial professionals are smart and are paid to make money at the end of the day. Whether you allow it our not I can guarantee there is a large percentage of professionals using these sites because it is helping them build their business. And remember it only takes one post to make this a “business use” and trigger the compliance requirements.

Myth #2: Those that are allowed understand the policy

There are over 150 different features on Facebook, Twitter and LinkedIn alone. How is it possible for anyone to remember the dos and don’ts on these sites? Ledermark found that a “significant number admit they don’t know which of the LinkedIn activities their company policies allow” (they did not specify the exact number). What makes matters worse is that these sites add new features on a weekly or monthly cycle. By the time you create your policy, roll it out and train your team it is already going to be out of date.

Myth #3: Social media doesn’t provide any business benefit

In the Ledermark study they found “more than 40% of professionals under 50 said a social media presence has led to doing business. They prefer LinkedIn for business and Facebook for personal use; however, both social networks allow them to be more visible, have a platform for questions and answers, and reconnect with old friends, introductions and referrals — all cited as how social media helped bring in business.”

This last part is important. At the core of these sites is the ability to network, connect, educate and learn. And this is where everyone is today. There are over 400 million Facebook users, 100 million Twitter users and 60 million on LinkedIn. Businesses built on networks and referrals can’t help but get value out of these sites. And if you still think you can’t, you are entitled to your opinion. My opinion is that your competition knows you can realize a positive ROI and will beat you to the punch.

Need more proof? Look at how one Financial Planner is using social to build her business.

Myth #4: You need to separate business/personal

Ledermark says it well “Even their personal use of Facebook is leading to renewed relationships, referrals and introductions that lead to business. The separation of church and state – the lines between personal and business use – has been blurred.”

I understand the desire to separate the two but when you step back and look at the situation you realize you are just limiting your success. Your personal relationships, acquaintances or connections will one day lead to a sale or a referral. They are gold. And remember, the value of a network is based on its size or reach. If you force the separation of church and state you are building a wall around your network, making it harder and harder to realize its full potential.

Myth #5: Firms and individuals understand the compliance issues

Ledermark summarizes their findings by saying “Whether it’s a no-use policy, unclear parameters or daunting approval processes, there is frustration among those who want to utilize social media for their practice and do it by the book.” We see it as well. Our Guide to FINRA/SEC Social Networking Compliance and our Twitter Guide have been download by thousands. We have a weekly webinar on the topic and every week there are 30-50 new participants all seeking to understand the compliance issues, how they can enable social and the tools available to help manage it all. It’s why we created Socialware Insights. The demand for clearer guidance on the compliance issues, policy recommendations, best practices, case studies and real-life information from the field, all updated as the social networks evolve, is off the charts.

I know there are more myths out there that need to be busted. Leave a comment and I will aggregate any new ones and publish another post.