Throughout the day, industry experts explained how firms are addressing the challenges of social media and seizing the opportunities that it creates. Speakers included LinkedIn executives Mike Gamson and David Hahn, social media pioneer Frank Eliason of Citigroup, and Socialware’s own CEO, Chad Bockius.

5 Social Media Trends that Cannot Be Ignored

One presenter after another emphasized how firms need to understand the dynamics of social media, grasp their impacts on marketing and customer interactions, and then integrate these insights into their business practices.

1. The social revolution is driven by clients. Consumers — especially influential younger ones in the emerging affluent segment — cannot imagine a world that isn’t digital, and they won’t make important financial decisions without doing research on social networks. In this context, the old command-and-control model of marketing, in which firms push out their messages and consumers passively accept them, is no longer viable.

2. Firms must engage in different ways. In his panel comments, Eliason was particularly eloquent on this point, describing most financial firms as “lousy” at having a conversation. Social media, by contrast, is about having a human dialogue, and this forces firms to be more open and to engage in different ways to build trust. Firms can get much closer to customers, he said, by asking what is important to them, and then evolving in response. All of this, he emphasized, can be done in the right way by partnering with regulators — who are still figuring out social media as well.

3. Consumers are making decisions in new ways. Financial services clients no longer rely on single sources for information; now they aggregate information by researching and sharing relevant content among their friends and connections. LinkedIn has enabled this process in several important ways, for instance by making it easy for firms to share content through Company Pages. They have also acquired a trove of business content (more than 9 million pieces of it) through last week’s acquisition of Slideshare.

4. Pervasively mobile, ready or not. LinkedIn has also made a major splash with its recently released iPad app. As Hahn pointed out, LinkedIn has had more downloads for that app than the entire circulation of The Economist. By looking at usage patterns, they are also finding out that LinkedIn members use iPads and desktops for different purposes. It’s clear that firms are paying attention to this, too: several senior marketers talked about how mobile usage is central to their social strategies.

5. “It is not about social business, it is about business.” That was a key point that Bockius made on the panel pictured above, “Affluent Investors:  Online and Looking for Guidance.” He was joined by executives from Charles Schwab, BlackRock, and OppenheimerFunds. The four of them talked about how social media improves firms’ abilities to engage clients — affluent ones, especially. All three of the financial firms represented are using social media to listen to even the most sophisticated investors and connect with them using highly relevant content, including video.

The Social Revolution in Financial Services Is Just Beginning

In his panel comments, Bockius encouraged his listeners to avoid the temptation to define their solution for social business before actually defining their social strategy. He emphasized that the entire industry is still in the early going when it comes to social media, and there is still much to learn about how brands, advisors, and other employees can best build relationships in this new environment.

For more information on how financial firms and their advisors are using LinkedIn and other social media, see our post summarizing LinkedIn’s latest research.

The survey findings are being released in connection with the LinkedIn Financial Services Summit underway today in New York City. Later in the day we’ll be reporting more from the Summit—where Socialware CEO Chad Bockius is a presenter—but we wanted to share some of that data with you now.

Advisors Use Social Media Regularly, LinkedIn Most of All

LinkedIn’s survey polled 463 financial advisors in the United States during February 2012 — including 139 advisors from wirehouses, 209 from broker-dealers, and 115 RIAs. Across all categories, 71% of advisors said that they are using social networks to do business. Among those advisors, LinkedIn has an overwhelming lead over other networks: 91% of advisors on social media use LinkedIn, whereas no other network is used for business by even one-third of advisors.

This is reflected in the large population of advisors on LinkedIn: more than 180,000 U.S. financial advisors use the network. They also use LinkedIn more frequently than any other platform — 53% of advisors on LinkedIn use the network at least once a week, and 74% use it at least once a month.

Advisors Are Using Social Media More than Ever

LinkedIn’s overall growth rates have been impressive. The network now has north of 180 million members, with millions more joining each month. The advisor population is also using LinkedIn more regularly. In fact, more than 60% of the advisors polled have increased their business use of LinkedIn over the past year. And while only 29% of advisors say that social media plays a significant role in their marketing efforts today, more than half — 52% — expect social media to play a significant role in their marketing a year from now.

Advisors Are Winning Business through Social Media

Many of the advisors using social media are seeing real business results from it, in terms of both clients and assets:

• More than 60% of them have used LinkedIn to gain new clients.
• Of that group, 32% used LinkedIn to bring in $1 million or more in assets under management.

The successful advisors are also using LinkedIn across many facets of their business lifecycle, especially during the early phases:

• “Improving the effectiveness of my referral network”: 75%
• “Cultivating client prospects”: 72%
• “Building my brand identity”: 61%
• “Enhancing current client relationships”: 55%

Increasing numbers of advisors are also using LinkedIn to expand their own professional knowledge and to share thought leadership with their connections.

High Net Worth Investors: Untapped Potential for Advisors and Firms

LinkedIn has also published the results of a separate survey of more than 600 high net worth (HNW) investors in the United States and Canada. That survey has serious implications for the way that financial advisors address the HNW market using social media.

One key finding from this survey is that more than 5 million HNW investors are actively using social media to help them make financial decisions. Of that group, 73% use LinkedIn — and they use it much more than Facebook or Twitter for having professional discussions. The survey also revealed that these investors tend to be much more active in their investment habits, doing more research online and making more trades.

Two more findings about these HNW individuals stood out:

• Only half of the HNW investors active on LinkedIn have financial advisors, whereas about 80% of HNW investors not active on social media already have advisors. That could mean a huge prospecting opportunity for advisors using LinkedIn.
• Of investors who already have advisors and use social media, more than half (52%) say that they would like to interact with their advisor using social media — yet only 4% of them actually do. Again, this could mean a major opportunity for advisors to build rapport to retain existing clients and increase their assets under management.

Advisor Use of Social Media Keeps Growing

Whether we look at HNW individuals or the broader population, it’s clear that investors — like virtually all other demographic groups, young and old — are increasing their usage of social networks. Savvy advisors are likewise using those networks to build their books of business, and they’re doing it more actively and in greater numbers than ever before.

Stay tuned for more on this subject and related ones as the LinkedIn Financial Services Summit continues.

But we also know that regulated professionals must be careful to maintain compliance in all of their business communications, whether that means newspaper ads, the telephone, old-fashioned paper letters, or the newest social media platforms. Firms and advisors have to ensure that their use of LinkedIn is compliant.

Maintaining Compliance on LinkedIn

The first thing to remember is that regulatory requirements apply just as much to social platforms as to older types of media. For example, if you’re publishing an investment prospectus, you must provide the proper disclosures and warnings, whether the prospectus is conveyed in print, electronically, or by smoke signals.

When financial professionals use LinkedIn to interact, their good judgment should prevail just like it would in any other business setting. An advisor operating within the rules doesn’t make guarantees about investments, doesn’t solicit endorsements, and always discloses risks. It’s the same behavior that applies to existing newsletters, email correspondence, and other business communications.

Let’s drill into a few specific compliance issues as they apply to LinkedIn:

• Profile Pre-Review. As FINRA has made clear with its 10-06 and 11-39 notices, static information in social media profiles counts as an advertisement. As such, it must be subjected to pre-review by the firm’s compliance officers. Our own experience indicates that the process should also include follow-ups to ensure that what was approved matches what was published: between 60% and 90% of profiles are posted with inaccuracies or unapproved content — even after going through pre-review.
• Recommendations. This feature of LinkedIn is worth calling out, because many financial professionals stumble over it. Registered investment advisors and their representatives are prohibited from using testimonials in any form of advertising, including social media. While the regulatory prohibition against “testimonials” applies only to investment advisor representatives, many broker-dealers and insurance companies have created policies keeping registered representatives and agents from accepting or giving recommendations. Quite simply, the potential for abuse is perceived by many companies as being unacceptably high.
• Disclosures. Every firm is familiar with the legal disclosures that must accompany just about any written material — even electronic materials like e-mail and social media content. We’ve worked directly with LinkedIn to make it easier for firms to help their professionals display this information without taking up valuable space in the biographical portions of the LinkedIn profile.
• Post-review. Firms already sample their advisors’ e-mails after the fact to ensure compliance. Post-review of social media content is appropriate for the many aspects of social networking that fall under the headings of correspondence or public appearances — which includes most of what users do on LinkedIn. Post-review is NOT appropriate for some features like LinkedIn profiles, and firms will need to take the time to understand the difference.
• Solicitation. Internet content is available wherever there is an Internet connection. If my social media communications describe the products or services offered through my practice, does that mean I’ve taken the first step toward a solicitation? What if my solicitation can be read where I’m not licensed and registered? There are regulatory pitfalls here that have not been tested. There are a couple of methods which may help mitigate solicitation risk. The simplest step is to add appropriate licensing and registration disclosure to your profile. A more risk-averse — albeit drastic — way of dealing with the solicitation concern is to make sure your (1st degree) network includes people only in states where you are licensed and registered.

Raising these specific points isn’t meant to scare you away from LinkedIn — far from it! But it’s important to keep them in mind as your firm makes its risk assessments and goes ahead with a strategy to enable its advisors or agents on LinkedIn, the business hub for the modern financial professional.

We have recently revised our LinkedIn compliance guide to reflect changes to LinkedIn and the evolution of regulations. If you want to dig into the specifics of what LinkedIn means in terms of compliance, download our Guide to LinkedIn Social Networking Compliance here.

It’s clear that, while other social networks deliver a lot of value, too, LinkedIn has become the place that financial advisors, insurance agents, and other financial professionals must be as they build their business online.

How LinkedIn Drives Business for Financial Professionals

Some people still think that LinkedIn is primarily an online resume site, only to be used for job-hunting. But that’s not so. LinkedIn’s own data shows that less than one-fifth of activity on the site is about finding a job.

So how are financial advisors, agents, and representatives using LinkedIn as the hub of their online business presence? In several important ways:

• Your new business card—and more. In the most basic sense, LinkedIn is replacing paper business cards. It lets people find you, contact you, and learn more about you—with much more detail and nuance than a business card or resume could ever offer.
• Your contact management system. Think back to the pre-Internet days and all the times you heard phrases like “She has an amazing Rolodex.” No offense to Rolodex, but today your professional network doesn’t live on a carousel of paper cards—it lives on LinkedIn. Even better, it stays up to date as your contacts change jobs, win awards, publish books, and so on. It’s never been easier to stay in contact with your network.
• Your new e-mail. Maybe you worked with a vendor you really liked two jobs ago—when you and he both had different e-mail addresses. But if you connected on LinkedIn, it’s a snap to go back to that vendor—to give him business, to ask for business, to make a referral for a job, and so on. For me, not a week goes without having this kind of online dialogue with someone in my network, even if we’ve been out of touch for a while.
• Your new professional forum. Face-to-face groups like the Rotary Club or the Chamber of Commerce still have their place, but in talking with financial advisors I’ve been struck by how much more efficient LinkedIn interactions are for them. You can make posts or leave comments on LinkedIn Groups, knowing that your message will reach like-minded professionals, and you can easily share your financial expertise with your contacts and their contacts. We’ve seen several advisors who have landed millions of dollars in business by making these connections on LinkedIn—and without suffering through another hotel lunch at another networking event.
• Your mobile command center. Because LinkedIn has put so much effort into its mobile apps, your professional contacts can now learn more about you—and vice versa—from anywhere, and all of the business functions explained here travel with you in your pocket or briefcase. This is a big trend, too: LinkedIn saw a 400% increase in its mobile traffic over the past year. LinkedIn’s newly-launched iPad app is sure to drive this traffic even higher.
• Your search engine. When you’re seeking out a particular type of company or professional, or you need to know which people in your network are active in a certain line of work or geographical area, LinkedIn’s search features radically simplify your task. You not only find the right people, you also immediately see how you’re connected with them. Which leads to . . .
• Your referral engine. Savvy financial advisors are cultivating warm referrals by doing their homework on LinkedIn. One advisor described for me the success he has had in using the LinkedIn contact lists of his current clients to target his likeliest prospects.

We took a deep dive into all of LinkedIn’s uses for financial professionals in the series of webinars that we recently created in partnership with LinkedIn and Ajax Social Media. If you want to get the most out of LinkedIn for your practice, be sure to watch all four of these webinars.

In the coming weeks we’ll be publishing even more about what LinkedIn is doing for financial professionals, and how those professionals are using the LinkedIn platform systematically to drive business.

Meanwhile, we’d like to hear from you: What’s your most effective way of using LinkedIn to build your business presence today?

Since I head up our engineering work, of course I focused on the IT-specific details discussed by the Facebook product, partner, and marketing leaders who spoke to us. But I was also struck by their repeated emphasis on cooperation across the whole Facebook ecosystem. This is important because it helps Facebook, Socialware (and other developers), and our clients deliver the best experiences for end users. It may sound touchy-feely, but if we do it right, everybody wins.

Connect, Tell Stories, Think Holistically

Three big messages stood out to me as I listened to the speakers from Facebook. All of them tied into the idea of connecting people and firms across the ecosystem.

1. Build for connections. Your company’s Facebook Page is like “mission control”—the hub of your efforts. The challenge is to figure out how to build connections with the individuals who have ties to your company, and do it in a way that encourages them to push out your content to their friends. That means you need to post content that’s timely, visual, consistent, and engaging, and you need to focus on the people who have the strongest ties to you. When the people who visit your page find your content meaningful, they’ll share it with their friends.

It sounds simple, but developers need to do the heavy lifting so that users can take really lightweight, easy actions to interact and share—and so that client firms get business value from that engagement. That’s true whether developers are focused on Pages, Apps, or Metrics within Facebook.

2. Make stories. Having a presence on Facebook is about more than selling ads, creating Apps, or even having an active Page for your business. It’s really about getting people to share your stories. If you focus on quality and building for connections as in point #1, you can then use many different highly targeted ads within Facebook to get individuals to be your fans.

Basically, there are no good gimmicks for this. People are people, and you have to create valuable experiences for them that build relationships and loyalty through many lightweight interactions over time. The challenge for us as developers is to create and integrate technology that makes all of this easier and helps firms use social interactions and social data to achieve better business outcomes.

3. Deliver holistic solutions. This is a big focus for Facebook as it works with developers in the PMD. The program includes developers who address different parts of the Facebook experience—Pages, Ads, Apps, and Insights. Facebook wants everything to be well-integrated, both from a technical perspective and in terms of the narrative angles mentioned above. The point is that all the players in the ecosystem—Facebook, developers, and clients—will continue to create a great user experience that Facebook’s users can trust, enjoy, and get value from.

Firms in the financial services industry will only get more involved in this ecosystem as time goes on. We’re pleased that our membership in the PMD will help us share with Facebook the technical and commercial developments that we’re seeing in the industry so that everyone can benefit.

Facebook® is a registered trademark of Facebook, Inc.

This guest post was written by Socialware advisor and former Salesforce.com CIO Kirsten Wolberg.

As an IT leader, you have less time than ever to react to the constant changes that arise around social and mobile technologies. But how do you keep up?

My own experience in rolling out cloud computing solutions at Salesforce.com, including the social application Chatter, has taught me key lessons about how to shorten the learning curve and deliver projects with less pain. One of the best things you can do, I’ve found, is to build consensus among the right stakeholders. In this post I outline a straightforward process for making that happen.

Identify Social Media Stakeholders Ahead of Time

With both cloud and social applications, there is a tendency for marketing or sales teams to adopt new technologies without consulting IT. When unforeseen integration issues come up, those issues are thrown over the wall for IT to solve. Too often, it’s only at that point that the stakeholders who should have been in the room initially are brought together.

The better approach, of course, to get the right people in the room from the start. So who are the right stakeholders for social technology rollouts?

• Network Security — Often the last invited to the table, but the first to hit the brakes on potentially risky IT implementations.
• Compliance — Less involved in cloud issues, but necessarily involved in social media. Compliance officers must be made aware of the risks raised by social media and how these risks will be mitigated.
• Legal — Like security and compliance, the legal team needs to be involved up front, because otherwise they will tend to stop social media implementations as they try to do their job of preventing undue risk exposure for the firm.
• IT — In some cases, IT will lead the initiative to implement social, but they should be involved in any event to manage implementation issues.
• Business units — Ideally, a move to social media will be sponsored or championed by sales, marketing, or business development as they work to grow the business. If your company’s social media initiative hasn’t found its business champion yet, go find that person. Otherwise, the whole project could die on the vine.

Don’t Throw Yourself into the Fire

The best way to involve these players is not to bring them all together at first. Having all of these groups in the same meeting without preparation tends to magnify the FUD (fear, uncertainty, and doubt) of each group. When that happens, you might get burnt to a crisp.

Instead, set up a series of 1-to-1 meetings to educate each stakeholder and elicit the questions and concerns they care about. Holding separate private sessions gives you time to listen closely, do the necessary homework, and dispel at least some of the FUD for each area before bringing all the stakeholders together.

When you do get all the players together, you’ll already have allies in the room. People will feel included, and they’ll be much more likely to listen to one another—and to you.

Set Limits that Drive Results

The focus for these sessions, the 1-on-1’s as well as the group meetings, is to get to Yes. Your attitude going in should be that the ultimate answer is to figure out how to make social media work at your firm, not to shoot it down. Be ready to communicate this assumption again and again to overcome naysayers’ legitimate concerns.

Another key limit is to time-box the process by setting dates for key decisions. You will never move forward if stakeholders, especially the risk-prevention experts in Compliance, Legal, and Network Security, feel that debate can be unlimited. Not every stakeholder needs to be ecstatic about the idea before implementation begins, but all of them must agree to work together to execute credibly.

The Bigger Picture for Social Media Rollouts

It’s vital to get the right stakeholders around the table and get them aligned so you can roll out social media for your enterprise. But that’s only part of a bigger strategy, which includes focused efforts around:

• A broad pilot-to-rollout strategy.
• Managing the process of continuous change for your firm’s employees.

Each of these aspects is explained in detail in the Socialware IT Best Practices document “IT Strategy for Social Media Implementation: 3 Lessons from the Cloud.”

1. How does social media fit into your firm’s priorities and strategies?
2. How did your firm get started with social media?
3. How does your firm stay informed about regulatory updates on social media?
4. How can financial advisors be most effective and efficient with social media?

The audience was great and jumped right into the discussion illustrating a key point from the panel:

More Social Media Conversation is Needed

A recurring theme was that more conversation is needed across the board… whether within firms among different departments or to also continually share best practices with advisors.  Discussion is needed as well between firms and the regulators to continue clarifying the challenges and opportunities of social media in both directions.  Thirdly, dialog between firms throughout the industry to address different business use cases for social networking with LinkedIn, Facebook, and Twitter.

Additional Social Media Questions from the Audience…

What are examples of measurable social media success for advisors? Here are few resources that provide insights into answering that question…4 Helpful Social Media News Articles and On Wall St., Keeping a Tight Rein on Twitter

Where can you go to understand the regulatory updates? One suggestion is the compliance category of our blog and another is our partner LIMRA and their dedicated compliance twitter handle @LIMRA_CRS

What are other resources for having those conversations to learn more about social media?  The panelists discussed the value of attending conference sessions.  At Socialware, we also think it’s critical that there are venues focused on delivering insights and dialog. Examples include:

1. IT Forum Addresses Social Media Challenges of CIOs
2. Financial Services Marketing Leaders Discuss Social Media
3. It’s Not Just Social Media: You Want Social Connection
4. Compliance Leaders in Financial Services- You Are Not Alone!

Whether commenting here on the blog, emailing info@socialware.com, or reaching us on LinkedIn, Facebook and Twitter, we welcome hearing your thoughts, questions and comments and keeping the social media conversation going strong.

There are risks, of course — especially around regulatory compliance. The recent articles cited below show that, although forward-looking compliance professionals are embracing social media, many financial professionals remain concerned about violating the rules. The last article explains how several large firms are tackling the issue of social media compliance for their employees.

• A piece from the Canadian trade publication Investment Executive, “Compliance should help advisors use powerful social media tools,” discusses a presentation by compliance officers at the recent Registrant Regulation Compliance Strategies Summit in Toronto. While acknowledging the “supervisory challenges” inherent in social media compliance, the presenters encouraged their peers “to go in with an open mind.” By doing so, they say, firms can help financial advisors create business value using social media, without running afoul of regulators.
• Securities Technology Monitor reports on a survey just conducted among nearly 900 financial advisors. While the participants’ use of social media is “booming” overall — especially for researching prospects and promoting business — compliance remains a real worry. In fact, 55% of those surveyed cited compliance as their “biggest concern” in social media.
• Last but not least, our own work was highlighted in a New York Times DealBook story, “On Wall St., Keeping a Tight Rein on Twitter.” The story goes into detail about how Guardian Life, Wells Fargo, and other firms are taking different approaches to social media while ensuring that they maintain compliance. Just as each firm has forged its own path in terms of its products and service offerings and its overall business strategy, each is tailoring its social media strategy to its own client base and organizational culture.

In other compliance news, we have also recently completed preliminary research into the workload impacts that social media messages create for compliance departments. Our findings undermine the assumption that opening up social media, even for a large population of financial advisors or insurance agents, will create a mountain of work for compliance officers. Follow this link to access our research summary.

Image source.

We’ve captured key takeaways from the conference — and other observations on the rapidly changing business landscape for financial services — in a webinar, now available on demand. (Click the image to access the webinar.)

Listen in as Socialware CEO Chad Bockius, Partner Director Rachel Garcia, and I discuss these topics and more:

• The need for life insurers to pursue channel diversity.
• How agents and firms can use new technologies to serve customers better.
• How the insurance business has moved “beyond the handshake.”
• The “flattening” of the insurance world.

Follow this link to access the webinar — and please feel free to leave your questions in the comment section below.

In the financial services industry, recruiting can be competitive. And firms that adopt social media across the enterprise can out-recruit the rest. Here are 4 ways that enterprise-wide adoption of social will help your recruiting efforts:

1. More Social Employees = More Recruiters
Effective firms recruit for every position, from every position. Corporate recruiters and branch managers may be the ones with specific goals for new hires and retention, but any employee can have an impact on finding and keeping the right talent. Your employees are your brand ambassadors, and their combined networks are more powerful than any single recruiter’s network.

Imagine a firm with 5,000 employees enabled to post job openings to social networks. At a modest 200 connections each, they have a potential reach of 1,000,000 individuals. Good luck finding a recruiter who can do that for you.

2. Your Culture Will Recruit for You
Let’s face it: there are A LOT of firms looking to hire top financial professionals. Well-qualified prospects will have their choice of suitors, and for most of them culture is a major evaluating factor. For many firms, the organizational culture is portrayed only on a single page of the corporate Web site, or through a few photos on their Facebook page. But with your entire workforce in place as social ambassadors, your culture can be on full display wherever prospective hires are present. If you’ve got a great company culture, make sure it shines through in your employees’ use of social media. Your recruiting will become much easier.

3. Younger Generations Will Expect Access
We already know there’s a huge generation gap in the industry. According to a recent study, the average advisor age is 49, and less than 6% of advisors are under 30. It’s going to take some radical thinking to bring in talented younger financial pros.

So think about your campus recruiting efforts. Do you think recent college grads will accept being denied access to social networks? Of course, they won’t. They’re already highly connected and proficient in social media, and they’ll expect to be allowed to leverage that in their roles as advisors. If you don’t let them, someone else will.

4. Social Media Access is still a Differentiator
Financial professionals are already driving business and deepening client relationships via social media. We’ve even seen some of them leave their firms specifically to find an employer that allows access to these tools. Social media access can be a valuable asset to attract talent. Ultimately, top talent will go to the firms that enable them to be successful. Blocking these new technologies doesn’t contribute to success.

Every financial services firm is looking for an edge in recruiting today, but too many of them are looking past an obvious advantage. Other industries have already proven the value of leveraging the existing workforce to find and retain the best talent, and social networks provide the path of least resistance. Since there are already solutions in place to overcome risk and compliance concerns . . . why wait?