Instead, Marketing should take up the challenge to perform true social networking by using social platforms to build direct connections with customers and prospects. To achieve this, marketers must answer key questions about our goals for social business, including:

• What messages does your firm want to deliver via social media?
• Will your use of social networking go beyond standard business communication?
• How will you drive real engagement—conversation—rather than simply publishing more content?

Marketing User Group Asks: “Social Content? Or Social Conversation?”

At Socialware’s latest Marketing User Group meeting, several members talked about the different types of content they have tried using to foster conversations on social networks. One member said that her firm had tried (with limited success) to start conversations around regulatory issues and accounting issues. Another member recommended putting oneself in the consumer’s shoes: “What do I want to hear from a company? Do I want them to sell me something?” In many cases, consumers probably do not want “brochure” content that aims to sell the firm’s products.

One attendee made the good point that content will differ based on the advisor and the type of clients served. Advisors ought to know what their clients want to hear, and prospects choose advisors based on styles of communication they like. This helps explain, for example, why some advisors constantly ask for more research to share, while others don’t want any. The goal of this particular attendee’s firm is to provide as much content as possible so that advisors can pick and choose what they need.

Should Marketers Start Conversations around Non-Financial Content?

As a marketer, do you believe it’s your responsibility to create content that is not financially related? For example, would you send out a message commemorating MLK Day?

In general, our User Group members agree that there should be a mix of messages, including topics outside of finance. One attendee said that his firm actively pursues other topics, for instance with content about families, living healthier, or keeping kids safe on Halloween. They find that this mix of non-financial messages is good for both retention and lead generation.

One attendee said that his company is focused not on pushing out just financial information, but on brainstorming articles and publishing content—financial or otherwise—each day that leads to conversation with prospects and clients.

Running the “Marathon” of Social Conversation

“You are embarking on a marathon.” That was the reminder offered by my colleague Carolyn Pawelek, who facilitated the User Group meeting. From everything we’ve seen, many advisors don’t know what to say via social media—and so they don’t say anything. Carolyn’s marathon analogy is meant to drive home the point that Marketing departments should provide tools for advisors to continually broaden their networks over the long haul.

Excitement and activity around social media creates intangible benefits like a greater sense of trust and connection between clients and advisors. These in turn lead to tangible benefits, from greater share-of-wallet for an individual advisor to higher revenue for the firm. But these benefits emerge most strongly when marketers and advisors invest the time and energy to build meaningful social connections.

Image source.

This week I would like to talk about Facebook and its importance to the financial professional. Like Twitter, the tool is often mocked by those who haven’t used it or who have created an account and have yet to spend any appreciable time on the service. Additionally, many of those who understand the personal significance and utility of Facebook struggle to see the true business value inherent in all the photos, status updates and games being played on the site.

Like last week, I ask you to stop and think about this concept for a moment.

There is a site where nearly everyone you know (there are over 139 million Americans on Facebook) has an account. On this site, these people are sharing details about everything that is happening in their lives. True, some people overshare but to them what they are sharing is important.

The average user spends over 15 1/2 hours each month on Facebook. During their time on the site each month, the average user shares 90 pieces of content. They are connected to a network of 130 people on average and are actively adding new connections.

Facebook is bigger and much more important than you can imagine.

It is hard to watch TV, read the paper or a magazine or visit a website without seeing a call for action on Facebook. The reason for this is the collision of the social graph and the interest graph that happens on Facebook.

• Social Graph – People connect with everyone who is important in their lives on Facebook and many connect with people with whom they have only a casual relationship. These connections and how they overlap across populations create a social graph. And since people tend to connect with people who have common interests, beliefs and lifestyles this graph offers marketers a powerful medium for targeting their message to a relevant audience. The logic goes, “if your friends like this, you most likely will too.”
• Interest Graph – People also declare their interests on Facebook on every facet of their human experience. They share what they are reading, what TV shows and movies they are watching, what music they like, their favorite sports teams, their politics, religion and more. They share this information either explicitly in their profile or in the pages and content they like or they share it passively through their behavior. As a result it is really easy to target an audience of people who have already indicated an interest in what you are sharing.

While all this might sound a bit creepy and a little big brotherish it also creates a lot of value for the user. An experience designed around what YOU find interesting, relevant and important is much more desirable than a haphazard random walk.

How can you use Facebook in your financial practice to drive value?

To answer this question I think it would be helpful to ask you question. What are some things that your clients, prospects or referral partners might share that would be helpful to you in terms of bringing in new assets or improving the profitability of your business?

To frame the approach you should take on Facebook let’s use the five steps in the Social Business Activity Cycle:

1. Connect – Build a robust network. Reach out and connect with as many relevant people as possible. Think about friends, family, colleagues, classmates and beyond. Imagine how powerful it would be if you could connect with all the great people you have met in your life? This is so important because it’s hard to see value in a social network without connections. Use Facebook lists to categorize your connections as clients, prospects or referral partners. The recent updates to the list feature on Facebook give you a lot of control and efficiency both in terms of sifting through the noise for relevant posts and who see your posts for greater message targeting. Think social and interest graph here.
2. Listen – Use your lists to listen to your network. FINRA has a rule that requires you as a financial advisor to “know your customer.” Your clients are sharing all sorts of things daily. Pay attention! Your prospects and referral partners are also sharing things daily. Some of the things people share like job changes, expecting a baby, getting engaged or experiencing a death in the family are indicators of money in motion. If you are listening, you can seize the opportunity to help.
3. Respond and Amplify – It’s odd to think that a person would take a picture of a tarantula crossing the road, post it to Facebook and expect a reply but that’s exactly why they are doing it. People use social tools to connect and engage with other people. We are social beings, we crave interaction and validation. Your clients and prospects will love that you chime in from time to time on things they post. That’s why they posted. You can be their most engaged and caring advisor. You can be the one who helps spread the word about the cause they are raising money for. You can share the link to their most recent blog post. Using the list approach mentioned above makes it quick and easy to scan your clients for opportunities to respond or amplify.
4. Share – People want to hear from you too. What did you read today that was interesting to you? Was there a Facebook share button on the article where you read it? If not, grab the URL for the webpage and paste it into a post on Facebook. What topics do your friends find interesting? What do you like? Share stuff about that. Be the one who shares the good stuff. And of course you should share timely content about relevant topics for your business.
5. Expand Your Network – Relationships are the lifeblood of a financial practice. Growing your network is a sure way to keep your pipeline full and your referral engine strong.  As you go about life you are going to find new people and new people are going to find you. Friend the ones that look most relevant. Remember, everyone you know has the potential to send you business.

There is a reason why companies have historically advertised on television, radio and print. You put your message where the people are. The same can be said of Facebook as the stats I shared earlier indicate. But there is something much more valuable here. Instead of broadcasting your message to the masses in hopes that your target customer might happen to see it and pick up the phone, you now have the ability to build a large network of highly relevant individuals, build and maintain relationships with them over time and be there for them when they need your services.

So what do you think? Do you see value for your business on Facebook? Are you using Facebook for business already? If not, what’s stopping you?

it’s simple, financial services are in large part relationship businesses where individuals like brokers, advisors and agents are managing relationships with individuals and institutions. I look at social tools like Twitter, Facebook and LinkedIn and I see some of the most powerful relationship management tools in human history and I can’t fathom why anyone would not be using these tools in their business.

I mention the bottom line, as in profit, because it is very important to be mindful of the fact that ROI can be generated by increasing revenue or decreasing expense or increasing efficiency. Sure, the top line is sexy. Everyone loves to talk about how they brought in millions of dollars in new business as a result of some new initiative. However, there are many ways to create ROI, particularly with social networking, that may be less flashy but in the long run will make your business much more profitable than it is today.

To get a deeper understanding of why this is, it helps to spend some time digging in to how social media drives ROI in relationship based businesses like financial services.

People and Clicks

When people/brands first look at social media they tend to approach it as they would a traditional marketing channel. They like the fact that it is highly targeted, that they can build an audience of self selected parties of interest. Then they go about sharing their marketing message with the goal of generating click throughs to their site where they hope to convert this inbound traffic from social to sales.

The ROI metrics here are a rather simple sales funnel approach. Followers/Friends/Connections > Content Created x Frequency > Clicks > Sales. The more relevant connections I have with the potential to see my message, the more likely it is that I’ll see an increase in sales.

This is effectively the direct mail model with the added benefit of better targeting data and an audience who has opted in. Executed properly, the “people and clicks” model should generate positive results.

Note: While top line driving campaigns such as special offers or new product announcements are the norm here you can also drive expense reduction and efficiency as well. Why not promote electronic statements as a means to save the environment, ease the client’s paper burden and lower cost? You can also encourage people to use the web channel or iPhone app for trading or simple FAQs so they spend less time in the phone queue while lowering your cost per customer service touch cost.

Network Development and Engagement

Where social really pays off is when we move beyond traditional marketing think into a true networking and relationship marketing process. Here we are focused less on how many followers the brand has but instead we are looking at the financial advisor’s individual networks.

The size of an advisor’s network matters here too but less so than at the brand level. Macro level marketing techniques are designed to produce results when exposed to large numbers of potential customers. An individual advisor does not need, nor can he service effectively, thousands of clients. Depending on his compensation model he may need fewer than 100 or as many as 300 to 400 clients. So, the process and the funnel are decidedly different at the advisor level.

An advisor must build a network. That network should contain as many current and prospective clients as the advisor has access to. The network should also contain complementary referrals sources such as CPAs, attorneys, realtors and advisors from other geographic areas.

The investment in ROI calculation at the advisor level is time spent building and maintaining this network and most importantly engaging with this network and the cost of the appropriate compliance friendly social software solution. The return comes in the form of:

• Lengthening the client relationship (retention) because the advisor is constantly in tune and in touch with his book of business. “Funny picture” “Happy Birthday” “Go Red Sox” are meaningful interactions that let a client know you care AND that you understand WHY he is investing his money. Think of how your firm’s business would improve if your customer retention improved by a few points each year?
• Increased share of wallet. Clients share their lives via social media. Job changes = 401k Rollovers. Death in the family = Potential inheritance or Estate planning. Expecting a Child = 529 College Savings Plan. Getting Married = Household Assets. It’s easier, and usually more profitable, to increase business from existing customers.
• New business from existing friends or connections. Not everyone is in the market for your financial services right now but they will be eventually. Staying top of mind and in tune with their lives ensures that you will be in the running for their business when the opportunity arrises. Think of all the connections your financial advisors have met over the years at trade shows, golf outings, and other events. What are the chances that some of these people might have money in motion each year and be in the need for the advisor’s services?
• New business from referrals. Staying connected to ones network is a tried and true way to ensure that when someone has a referral that they think of you. Ask any advisor where his or her business comes from and most will tell you referrals. There is a give to get networking karma process at work here though. The advisor needs to be actively looking for opportunities to help his network in order to build good will and reciprocity.

In each of the examples above there are also real reductions of cost and significant efficiencies in play. It is much easier to stay connected with clients, prospects and referral partners when they are voluntarily sharing information on a frequent basis with the advisor via their stream.

The ROI will come as the result of the advisor’s ability build and manage a network just as it has for the entire history of the profession.  Advisors and other professionals have happily paid dues to join country clubs, chamber of commerces, Rotary and other organizations because that is where they meet high quality prospects and referral partners. Financial firms spend millions to sponsor golf events and America’s cup racing yachts because it creates an environment where their advisors can work the room so to speak. Social media offers the same opportunity as these options at a decidedly lower cost and with the convenience of going wherever the advisor’s smart phone goes.

Photo Credit: Ewan McIntosh

As I encouraged the attendees to jump into the conversation and share their experiences, questions and thoughts, only a few minutes passed before they responded.  This free flowing conversation created an unmatched dialogue specifically focused on the challenges and opportunities of social media in financial services.  During the forum breaks, there was so much conversation between the attendees representing more than twenty firms including wealth management, insurance, broker dealers, and industry associations, it showed the strong interest in this type of event.

All of us benefited from a variety of presentations including an update on the regulatory perspectives on social media use by Steve Selby, Director of Regulatory Services at LIMRA from the roundtable that Socialware and LIMRA hosted in May in Washington, D.C.  Panelists from Forrester, Guardian Life, LinkedIn, and Morgan Stanley Smith Barney, shared their thoughts and fielded numerous audience questions.  In closing the panel, each speaker discussed the one word that explained social media in financial services with answers including “everywhere, dynamic, efficient, relationships.”

Throughout the forum, attendees also discussed what it takes to adopt a culture that embraces social media and how to ensure firms are focused on the differences between social media and social business including the necessity to measure what the firm values when using social programs.

A lot of interesting stats were shared during the presentations.  For example, according to Forrester, 60% of individuals with investment accounts use social media and more than 90% of households with $1MM in investable assets are online. Speakers also made points including one from Steve Holstein, CMO of Guardian Life Insurance of America, “ Social media is here.  The question is what process to put in place to support it.” To learn more about the Social Media in Financial Services Forum, you can read the live tweets from the event by visiting twitter #fincmo.

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.

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.

The Social Business Era Is At Hand

starting the process of moving our family from Boston to Austin.

My Road to Socialware

My career path has been a rather unique one. I first started in the financial services industry back in 1994 answering phones for mutual funds at BFDS and over the next few years worked my way out of the client services side of things and into corporate finance. At the age of 26 I was part of a finance team that reported directly to the CFO of State Street Corporation and I had my finger on the pulse of how an S&P 500 financial firm worked. After finishing business school I moved to Fidelity Investments where I worked in channel management right as the web was moving to becoming of significant importance to both retail and institutional business.

I discovered a few important lessons during these early years of my career:

• Customers want to to contact their financial services providers via the channels that are most comfortable for them. Some like the phone, some like snail mail, some like online interactions and so on. It is our job to be available where the customer wants us.
• The world changes quick. When I started in 1994 no one at the company had a web browser at their desktop. Most employees did not yet have email. And while there were a few beepers around, no one was carrying a cell phone let alone a smart phone.  But within three years we all had web browsers and email. Before the end of 1999 we were all trading online and Palm Pilots and Blackberry’s were cropping up. Consumers, particularly high value consumers, adopt new technologies at a rapid pace and it is our job to be ready.
• Costs come down as utility improves. In the early days of any new technology things tend to be very expensive. But as adoption spreads, unit costs come down and the learning curve to use the technology flattens we see huge utility and productivity gains. The inflection point for a technology to move beyond, high priced, time sucking time waster to indispensable business tool will happen. If your customers are using the technology too the inflection point comes much sooner than you might expect.

I took these lessons and my crazy entrepreneurial drive and decided to set out on my own. In 2006 I started an independent Registered Investment Advisory (RIA) firm and set out applying all of this goodness to my own business. One advantage I knew I had in getting started was my early adoption to social media. I was was user number 176,299 on LinkedIn, (there are now over 100 million users) and I saw a tremendous opportunity to connect with people with an efficiency that was never before even remotely possible.

Before long I was getting into podcasting and I was exploring other social media avenues. A trip to PodCamp Boston in the fall of 2007 was when things went to the next level. It was there where people like Chris Brogan, Chris Penn, Mitch Joel and a few hundred people packed into a big room opened my eyes to the full power of digital media for business. This is where I also first learned of a little startup called Twitter.

Discovering Twitter and the resultant explosion of my social network from using it was a bit of a life changer. I met new friends and business contacts whom I never would have met without Twitter. I learned about events and new ideas from people all around the world faster than I could have ever imagined possible before. This new type of social media was going to change everything. That’s when I dove in to social head first.

Since then I have created a social tool called Tweetworks, spoken at numerous conferences on the subject of social in business, and have been fortunate enough to become friends with some of the thought leaders in social business. You might say I had found my calling.

Socialware: The Perfect Fit

It’s just a theory but, I suspect there are few finance guys who have deep backgrounds in social business. And I would wager it is just as unlikely to find social media pros with 17 years of experience in the financial services industry. When Lani told me about Socialware I knew I had to be involved in the company.

Socialware is solving a huge problem for a very important industry that provides very important services to all of us. We all use financial services. And most of us, soon to be nearly all, use social media on a day to day basis. We are coming to expect our service providers to be social too just as we expect them to have a website and phone centers to handle our calls. At Socialware we make it possible for financial services companies to do just that and stay within their regulatory standards.

Social media will never be this new again. Being here now is a very special opportunity to make a big impact on two industries that I care deeply about. This is going to be a very exciting time. There was no way I was going to miss it.

One quick note before you go:

Please feel free to share your thoughts about the opportunities and challenges you are seeing at the intersection of financial services and social media here in the comments section on the Socialware blog. I would also love it if you followed Socialware on Twitter and Facebook. And of course you can follow me on Twitter, find me on LinkedIn and Facebook as well.

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.

My summary is that advisers are failing to take advantage of key technology that will allow them to prospect more effectively, build stronger relationships with clients and tap into the referral sources waiting for them in their client base.

Their first finding is that “62% of financial advisers don’t communicate with their clients on a regular basis and acknowledge this flaw is their greatest failing when it comes to providing service to investors.” What I find shocking about this finding is the fact that communication has become exponentially simpler in the last 5-10 years. You can email, IM, text, send messages over social networks and more.

Also consider a finding by the Spectrem Group. “Nearly 40% of investors with net worth between $1 million and $5 million said they expect a call back from their adviser within two hours or else they would consider making a change and finding another financial professional to service their accounts.” Clearly the expectations of affluent investors are increasing. Part of this is being driven by the fact that so many new communication channels are focused on instant gratification. We live in a world where email is the new “snail mail”!

So what can you do as an adviser? First and foremost, you need to recognize the needs and expectations of your clients and prospects have changed. In addition, it is critical to understand the power of the social platforms, like LinkedIn, Facebook and Twitter. These platforms not only allow you to quickly and effectively grow your business network, but they also give you a constant two-way flow of information.

John Anderson, the head of practice management for SEI believes that “Frequent and meaningful communication, delivered in a variety of ways, is the best method to build lasting trust between advisers and clients, which ultimately leads to stronger relationships.” Used properly, the social networks are your best tool in the battle for more productive and efficient relationship building. These sites won’t replace a face-to-face conversation but they will make every interaction stronger and help you stay connected between those infrequent meetings.

With all this opportunity you would think advisers are flocking to the social networks. There are obviously compliance issues that have slowed adoption but there is also a lack of knowledge on how to best utilize these sites for business. The SEI report found that “only one in five advisers connected with at least one new prospective client last year.”

The companies and advisers that are going to win in this market will first figure out that prohibition is not an option, and second that true engagement will be the way to lasting and measurable business results.