Last week I sat down with Socialware CEO Chad Bockius for our 2012 Predictions webinar, in which we discussed the social media trends he sees emerging in financial services. Now you can listen to the archive of the webinar to hear why Chad thinks that this is the year when social business gets personal, along with his specific predictions for consumers, financial advisors, regulators, and enterprises.

Social Business Questions Advisors and Enterprises Must Answer

Early on, Chad made the observation that “Social is how we live now—not just how we play,” and pointed out that consumers are increasingly turning to their social networks for trusted recommendations on handling their finances. We then talked about a number of issues that financial professionals must address if they want to get the most out of this sweeping change, including:

• What do enterprises need to do to build momentum in social business?
• “Social is the unfair advantage of 2012”—but how engaged does an advisor need to be to expect returns from social?
• What actions can we expect from the SEC and other regulators this year, and what can companies do to be ready?

As you’ll hear in the webinar archive, we left half an hour for Q&A—but still weren’t able to get to all the topics raised by audience members. Here were some of the questions we discussed:

• “Companies are losing support and engagement from the broader firm because only a select few have access to social media. . . . What would you recommend?”
• “Do you have any advice for social networking as it pertains to independent broker/dealers? Is there an added benefit in social media for a B2B-based firm?”
• “When you talk about 100% adoption, are you referring only to the sales force, or to all employees including marketing, product, and support personnel?”
• “We have brokers who are on LinkedIn and they always ask, ‘I’m on LinkedIn, I have connections, now what?’ How would you answer them?”

To hear the discussion around these questions and many others, click here for the webinar archive page. And feel free to leave more of your own questions in the comments on this post.

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Substantial social media change and growth

The entire social media landscape has evolved quickly on the regulatory front (the release of FINRA 11-39 was already months ago!), technology front (numerous updates to Facebook, LinkedIn, Twitter, and more), and also, very importantly, best practices as financial advisors discover and improve upon using social media to develop new and strengthen existing business relationships.

A few weeks ago, Chad Bockius, Socialware CEO, and I hosted a 2011 Year in Review webinar. There were so many potential discussion topics, yet we focused on a few specific points:

• Growth of Facebook, LinkedIn, and Twitter
• Evolution of the regulatory landscape (For even more recent developments, read about SEC and FINRA updates this week.)
• What it takes to deliver social business success within a firm
• It’s about the client, not the firm: how client relationships are changing and why social media matters.

Future social business potential

Since we are already in the second week of January, now it’s time to move onto the potential of 2012.

This week, Chad tackles 2012 Predictions for Social Media in a live interview regarding what to expect going forward. Social networking is getting personal for firms. Here are few topics that you can look forward to exploring:

• Overarching trends for business social networking
• Realizing corporate leadership commitment for social media
• How to grow social media use effectively throughout your organization
• What are some of the emerging social media technologies for 2012?

Tune into the webinar and the Q+A to learn more about what to expect for social business developments in 2012.

The survey turned up many interesting trends that have particular ramifications for financial services companies. For example, 38% of respondents agreed that there were significant hurdles to adopting social media for business purposes, including the inability to archive data and time constraints. But this figure is down from 50% in our 2010 survey, which suggests a greater understanding of social media and more ability to use it effectively and efficiently.

The figures I’m citing make sense when you think about the overall pervasion of social media into our lives. But as you probably know they also raise complex compliance issues for financial services firms.

The State of Social Business, Straight from the Source

You can find more information in this vein by reading the Social Media Use survey. (Socialware customers have access to the complete report, but anyone can access the Executive Summary via the link.) We also continue to gather first-hand information on these issues in our user group meetings with Socialware customers.

Many knotty questions of access versus compliance in social media surfaced last week during our closed-door session here in Austin with compliance officers from across the industry. For instance, one firm represented has not yet allowed Twitter use for its advisors because any reply an advisor would make on Twitter — even something as simple as “@user Thanks for following” — would link to the outside user’s account, raising questions of whether that link could be construed as an endorsement. The compliance officers in the group are well aware that “@” replies are a basic piece of Twitter’s plumbing, yet still have concerns about exposing their firms and their advisors to compliance risk.

As a long-time business analyst and social media pro who’s new to Socialware and the financial services industry, I find it fascinating to dig down into the realities of social media compliance and risk. In some cases, these realities put a huge STOP sign in the path of social media practices that companies in non-regulated industries regard as fundamental. In other cases it’s a matter of getting the regulations and standard practices within the financial industry to catch up with the technology of the social networks.

Later this week, we’ll continue our research as we hold a similar meeting in Boston for marketing officers. We’ll be sharing some of the key findings from these meetings in future posts.

Join Us to Learn More at the Boston Social Media Breakfast

If you’re in the Boston area, you’ll have a chance to hear experts on these topics in a panel discussion at the Boston Social Media Breakfast this Friday, November 11, from 8:00 to 10:00 a.m. I’ll be helping moderate the panel, which includes social media experts from both large financial firms and specialized consultancies.

Financial firms and financial advisors need a steady flow of good information on current and emerging best practices for social business in the financial services industry. That’s what we’re here for, so join us in Boston this Friday if you can, and stay tuned to this blog for much more on these topics.

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We just released the 2011 version of the survey results with even more data about the impact of social media on the financial services industry, particularly focused on the advisors themselves.

Here’s some background on the advisors:

• Age- It wasn’t just the younger advisors who said they were using social media.  75% of the advisors replying to the survey were 36 years or older.
• Practice type- Advisors from all segments expressed interest in the survey.  Independent advisors, others with large firms, advisors just starting, and many with very established books of business.

Social media usage had definitely increased since last year.  In our 2010 survey, 60% of the responding advisors were using social for business purposes.  Fast forward to this year, and the number was greater than 80%.  And they are seeing results telling us about the referrals, prospects, and new clients coming from developing and deepening relationships through social media.

Prioritizing social media among the advisor’s tool set of options is increasing as well, so it’s not just a matter of “using social media.” Here’s how some of the advisors described social media in their own words:

• “This is where the people are.”
• “I think it’s a must going forward if you look to be competitive.”
• Social media is a “great way for prospects and clients to learn more about us and deepen relationships.”
• “We want to grow our firm by 20% annually for the next 5 years. We find social media to be an incredibly cost effective way of achieving that.”

To learn more about the survey results, the executive summary is available now.

When you hear API, proxy, or hybrid used, it will typically be centered on the topic of social media archiving. And when it comes to compliance, there are some fundamental facts we know to be true:

• Social is a form of electronic communication and thus requires regulatory compliance.
• Archiving business communication on these platforms is a requirement.
• Archiving some of the communication on social networks is not enough.
• Having an effective system in place to detect misconduct is a requirement (MetLife was fined for this last year – they had a policy for email archiving, but the system of management wasn’t effective?)

Just because this is a new medium, it doesn’t mean that regulators will settle for half-measures or incomplete policies/solutions. Firms have a real challenge to not only address the core compliance risks but also figure out how to make social work for the business. And while you are evolving your strategy, be sure to keep an eye on the regulators. FINRA, for example, is issuing additional guidance in September as an extension to Notice 10-06. And in the midst of all of this, social networks are changing daily requiring a constant focus on how those changes impact policies and procedures.

While the conversation typically starts with compliance, it can’t end there. The other side of the coin is business success. You wouldn’t give the keys to a brand new car to someone who doesn’t know how to drive. Social media in financial services is no different. The guardrails of compliance are critical, but those that are getting access must also have the tools and education to deliver results for the business. If they don’t, why take the chance of giving them the keys to the car?

You might be saying, “Yes, I agree, but we are just going to start with compliance.” I can’t fault that approach. The time this becomes dangerous is when the organization focuses on the short-term deployment vs. the long term strategic needs of the business. It is a little like getting in a car to drive cross-country but deciding to leave your GPS at home. Social adoption is a journey, not an event. The road you set off on initially will determine if that journey ends in success or failure.

This puts a premium on having all of the information and education you can before making a decision. Here are some resources to help get you started:

• Social Media Adoption Life Cycle Webinar
• Morgan Stanley Smith Barney Social Media Strategy (video)
• Social Business Activity Cycle

In addition, here are a few questions you should ask of your team or your technology partners before starting your social media journey:

• Can we capture all of the content being created on social sites for business purposes?
• Can we limit access to features on the social networking sites without removing end users from the social networks themselves?
• Do we need to rely on end users to register their own accounts?
• How do we manage personal vs. professional content on these sites?
• Do you have a strategy for how you will ensure end user success (not just access)?
• Do you have a proven mechanism to associate social activity with business results?

These are just a few of the key questions you will want to dive into. After 3 years and 100+ customers, we can share many other questions that your firm will want to consider.

In the early days of my role as Socialware’s Social Business Strategist I have noticed what I would describe as a gap between understanding intellectually, at least at a high level, that there is business value in using social media and a full on conviction that these tools are powerful and arguably indispensable to the modern financial professional’s business. In doing some brainstorming with Stacy Yamaoka and Carolyn Pawelek, of our Customer Success team, about the user path to social media adoption I came up with what I believe is a simple process to close this gap.

The process builds on an idea Stacy had for a simple checklist of tasks that users at financial firms could use to get up and running. In her role as Implementation Manager she uses a checklist at the company level for our customers. It seemed only logical to use a similar checklist at the user level. But, as I thought about it more the checklist’s linear “get it done” approach wasn’t really going to go very far in getting the financial professional to success with social. We needed a to create an easy to understand framework for ongoing activity designed to produce profitable business results.

Introducing the Social Business Activity Cycle

The Social Business Activity Cycle is a simple, five step process for managing relationships with clients, prospects and referral partners. With this process, users can easily get started and quickly move into realizing real business value from online social networking. The efficiency of the system ensures that users won’t get bogged down in minutia or be overwhelmed or frustrated. In financial services time really is money and what we have created with the Social Business Activity Cycle is a way to realize positive ROI via a straight forward daily process.

Below is an outline of the Social Business Activity Cycle. You can also download a PDF  to use at your desk or share with your colleagues by clicking here.

The goal of using social networks for business is to:

• Enhance the profitability of existing client relationships by retaining clients longer and increasing share of wallet per client.
• Win new clients by staying engaged with prospects and referral partners.

Here are 4 ways to think about how you can utilize social media.

Your Personal Database:
Remember Bill Clinton’s index cards that we mentioned in a previous post. Bill Clinton created index cards for people that he met, along with a key fact about them. He would review and memorize these cards so that when he met people, he could not only call them by name, but also bring up a personal fact about each person.

That was before the age of LinkedIn.com or Facebook.com. You can now gather the personal information that Bill Clinton stored on Index cards and more just by visiting someone’s profile. Instead of building your own database, utilize pre-existing information on Facebook to gather personal information, and LinkedIn.com for professional information.

Easily Talk To Customers AND Their Friends:
The name of the game has changed. A birthday wish via a hand-written card has evolved into a Facebook post. While hand-written cards can still be very valuable, wishing a person “Happy Birthday” on Facebook.com reaches not only the recipient, but all of his network.

The other day, a financial adviser mentioned that his moment of clarity came on his Birthday when he received 50+ birthday wishes, with over half coming from his clients. Not only did all of his clients see those birthday wishes, but “friends” of clients who wished him a happy birthday viewed these warm wishes as well. What a great opportunity for warm leads!

Reach Prospects:

In the example above, you can see how easy it is to reach your customers AND their network. Referrals are the lifeblood of any business. On LinkedIn.com, you can look for connections of connections. By asking your connections to introduce you to their connections, you can simply expand your network to find new customers and partners.

Also, you can use Twitter to build your prospect list as well. Twitter users are very accepting of followers even if they do not know you. It is easy to “talk” to new people online. Through a quick search, you can find people that are researching finances or partner connections that can help refer business to you.

Time Savings Online:
Social media isn’t about changing your business strategy. The principles of building relationships and engaging with prospects are the same. However, the opportunities that social media can offer you can exponentially increase your reach, and save you time => Social Business.

Being effective is about using your time wisely to make the biggest impact. Social media gives you those tools.

Advisers recognize the importance of social media, but recognizing the value, and “finding time” to complete those tasks is a constant struggle when dealing with a packed schedule.

Recognizing and acting on those connections is a priority for your business.  Bill Clinton is a key example of someone who has utilized this strategy throughout his life. This knack for connecting with others didn’t just materialize over night. Bill Clinton created index cards for people that he met, along with a key fact about them. He would review and memorize these cards so that when he met people, he could not only call them by name, but also show him that he had been listening to them, by bringing up the personal fact about each person.

In your business, it is just as important to reach out to your customers frequently to let them know you are working on their behalf. A successful adviser connects with their constituents 28 times a year. With anywhere between 50 – 250 customers, it is difficult to reach all those people through email, postcards, phone calls, and in-person meetings. When you think about everything you need to do to be successful, adding social media to that current mix probably makes your head spin!

But, social media isn’t just an additional task. It is an opportunity to build deeper relationships, create new relationships and do it more effectively and efficiently. A key component of your day is still building and maintaining those relationships but how you deliver those touch points has evolved.

Older clients have young heirs

The other day Sarah Moore, our Sr. Director of Sales Operations here at Socialware, and I were role playing a mock sales presentation in our office. She played the role of a seasoned advisor/executive at a financial firm and I was playing the role of Social Business Strategist evangelizing the benefits of social to her business.

The conversation was going along fine until she hit me with a stumper of an objection and we were interrupted by each of us needing to run off to meetings. There’s nothing more maddening than feeling like you got smoked and having to stew on your reply not knowing when you will get a chance to circle back. Of course later that day I had the “I GOT IT!” moment and couldn’t wait to share it when I saw Sarah a few days later.

So, what did Sarah hit me with that stopped me in my tracks for a few hours? Older longtime clients.

Me: “Can you see how using social tools such as Facebook, LinkedIn and Twitter might help you develop deeper relationships with your clients?”

Sarah (arms crossed): “I already know my clients. I know everything about them. They’ve been with me for years. And besides, most of them are older and they aren’t using social media.”

Of course, most of us know that the last point simply isn’t true. The 55+ demographic is strong and growing on Facebook and other social media venues. But, that wasn’t her real objection. What she was saying is that her relationship with these older clients was solid and she did not see how social media was going to improve her business with these clients.

She was effectively asking “How can developing a social business help an advisor like me? I have a mature client base. And frankly, life is pretty good.”

The Response – Your clients will change. You need to change with them.

Social media interactions may not move the dial with Sarah’s existing clients. She may be right, they are likely loyal and very comfortable working with her. But, what about her clients’ heirs? Who will be charged with assuming legal authority over her clients’ assets and accounts when those clients lose their decision making capacity? Who will these people turn to when they have questions about the finances of their parents and grandparents?

This is where the game changes. For even if we concede, for the sake of conversation, that older generations aren’t using social tools to interact with their advisors, we know for sure that their offspring are. And increasingly people expect social media interaction from their service providers just as they came to expect companies to have websites back in the late 1990s. These connections are the ones who hold the keys to the lifetime value of an advisor’s book of business. They will decide whether to keep assets with Sarah’s firm or move it somewhere else when they assume control.

So, my response to the objection is…start developing relationships with your next generation of clients now before they are faced with the decision of what to do with the money.

To date everyone has been clamoring to build a presence. The focus has been on marketing activity but lacked the tie to true businesses objectives. Many marketers got a pass on the measurability of social with excuses like “it is simply too new”, “we can’t be left behind” or “there is no way to measure the impact.”

In my opinion, we are exiting a time of social media experimentation and moving into an era of Social Business. Organizations (and not just marketers) will seek to integrate social into the business but must do so in a measured fashion, with alignment to the core objectives. The time has come for organizations to realize that “social” is not a tactic, it is strategic to the business. That concept will scare many executives. Those executives will take the path of their counterparts that missed the wave created by e-Commerce. Meanwhile, the innovators will recognize the opportunity, build successful programs and set their business on a new path as a result.

Before we go any further lets take a minute to define Social Business. While the definition is simple, the execution can be challenging without the right sponsorship, alignment and technology.

Social Business:  Cultivating relationships to drive measurable business results

In reality this concept is nothing new. However, the execution of social business has been turbo-charged thanks to the social platforms like LinkedIn, Facebook and Twitter. With these new channels, relationships become more visible, networks expand, insight gets driven from information and as a result relationships become more effective and our ability to tap into their power becomes more efficient.

Now before you start thinking that this “social thing” is a fad let me remind you of a few statistics:

• Facebook now has over 650mm members and those members make 80,000 wall posts and 500,000 comments every minute.
• LinkedIn has surpassed the 100mm member mark and is growing faster than ever (and they are going public this year)
• Twitter has over 175mm users and continues to be the place where news breaks first

But let’s be clear – this isn’t about Facebook, LinkedIn or Twitter. This movement is all about people. The entire world is going social and these technologies are accelerating that movement. The new “Web” will made up of people, not sites. How will this change your business? Are you ready to capitalize on the opportunity?

For organizations, social does have a risk of falling by the wayside if you don’t take the proper steps to integrate it to your business. It all starts with defining the appropriate objectives, deploying programs to maximize results and having built in mechanisms to measure, analyze and improve.

If your team brings you friends & followers, push back and tell them you want relationships. If they bring you likes and re-tweets, push back and tell them you want business engagement. If they bring you sentiment and conversations, push back and tell them you want revenue. It’s imperative that businesses take social initiatives to the next level by moving beyond indirect metrics and start tying results to the bottom line.