As social networks continue to evolve four years later, there is still a lot of truth in the POST concept since it speaks to the need to bring business objectives and the customer central to decisions about social media.

One anecdote that I heard recently from the Austin Facebook team is the insightful comment by the CMO of Diageo, Andy Fennell, who spoke recently about marketing no longer being like bowling where you are pushing out a message in hope of it hitting the audience.  Marketing is now more like a pinball game with dynamic interaction.  This involves listening, responding, engaging rather than just sending a message one way at people.

There continues to be new technology capabilities on social networks sites, but the question is still… what business objectives are you trying to achieve?  I overheard a set of questions during a social media conference along the lines of… should we do such and such on Facebook or on Twitter?  While each social network has unique aspects, often, the answer comes from what are you are trying to achieve and how will you measure if it is working vs. jumping directly to the features and capabilities of each individual social network.

One key strategy question is whether you are looking to use social media to speak as a company brand with an arm distance relationship with your fans, followers, or friends?  Another option for many companies with large distribution channels is to approach social media as a way to have a much closer, engaging relationship from person (advisor) to person (client or prospect) vs. a company speaking to people.  It may even be a combination of both strategies that works best for your firm.

So how do you not only get started, but start effectively, efficiently and importantly, quickly? If the social networks keep releasing new technology options, than there’s no time to spare.  That means looking for resources that already exist from trusted sources, so you don’t have to recreate the wheel.  Examples include:

• Policy templates
• Quick start guides
• Best practice examples aggregated from firms that have already initiated programs
• Programs to get employees up and running on social media

The discussion around social media has so many metaphors, but social media really isn’t like a light switch except possibly a dimmer switch.   It is your firm’s decision how quickly and fully to turn on the light and embrace social media while keep in mind those key considerations:

• People (your current and future clients)
• Objectives (what are you trying to accomplish and how does social media fit in)
• Strategy (quick start programs, best practice resources, and employee training)
• Technology (ensure compliance, enable measurable results, stay on top of social technology changes)

In my opinion there are 10 reasons why firms should start down this path immediately.

1. Competitive advantage
   The industry slowly started moving towards social early last year. Near the end of 2010 the pace accelerated. Today firms feel the competitive pinch, recognizing that major players are not just opening up access but treating social as a competitive weapon in their business. Social is becoming core to an effective, integrated digital strategy. In a world of no call lists, indifference towards email and lack of trust in advertising, firms and advisors must find new ways to connect with customers.
2. Recruiting
   Over the last 12 months we’ve seen firms use the fact that they provide social media access as part of their overall advisor recruiting message. In an InvestmentNews article Amy Webber, President of Cambridge, mentioned that as part of their social media program they’ve “launched a council to help shape the way the broker-dealer accommodates and recruits the next generation of advisers.” Clearly placing an emphasis on how next generation technology (ie., social media) will be critical to the advisor of the future. In 2011 and 2012 this message is going to evolve to focus less on providing access and more on partnering to help drive true social business. Firms that start now will have a head start in the recruiting battle and will be more effective at helping advisors use these tools effectively and efficiently.
3. Consumer demand
   Today 1 out of every 6 minutes is spent social networking by consumers. And the volume of users is massive. There are over 750mm users on Facebook, over 275mm on Twitter and over 125mm on LinkedIn. Social networking for consumers is as core to our online experience as Google is these days. What this means for you is that consumers expectations are increasing. They expect their advisors to be on social. They expect to be able to communicate via this medium. They also expect more transparency – largely due to the last few years. And if you aren’t there, you should expect your competition to be, waiting to help fulfill YOUR customer’s needs.
4. Advisor demand
   In a recent research piece we found that advisors that participate in social earn more money, have larger average account sizes and more clients (look for the full report shortly). Results like this are reasons why Ledermark found that 85% of financial services professionals under 50 are utilizing social media. And this number is only increasing. Most have already seen the news about Morgan Stanley, opening up access to advisors and as April Rudin, CEO of The Rudin Group, points out “When Morgan Stanley Talks, People Listen.”
5. Compliance risk
   Some firms still believe that a policy of prohibition will keep them safe and out of the cross hairs of the regulators. This couldn’t be further from the truth. A Socialware survey from last year showed that over 40% of advisors were knowingly violating corporate policy by use social media for business purposes. If you do have a policy of prohibition you must have procedures in place to test and ensure adherence. A quick search of LinkedIn will illustrate that trying to prevent this tidal wave is a futile exercise. FINRA started doing some cursory audits using this approach last year. For 2011 they made social media an examination priority. In addition, you are starting to see action by the SEC and the state regulators. This action is not only guidance and examination, it is also fines and suspensions. Earlier this year FINRA took action on an advisor who was posting inappropriate content to Twitter. This is just the beginning, especially for firms that choose to hang on to a state of prohibition.
6. Brand awareness
   In an age where trust in brands is decreasing and trust in friends and family is increasing, firms have an opportunity to leverage the power of social networks to grow their brand’s awareness. It won’t necessarily come from corporate pushing the brand message, but rather from the people that make up the brand. Specifically, those individuals that have personal networks that will listen to what they have to say and ideally help spread the word.
7. Top line growth
   As firms progress from prohibition to participation, the next level and ultimate goal is social business. It isn’t enough to simply have a presence. If you are going to take the leap into social, the goal should be to support your corporate objectives and your advisors individual goals. This ranges from lead generation, partner development, account growth, client retention and of course recruiting. Not only can the right social program drive these objectives, but you can also measure your results. As you work to develop your strategy you might find the following videos helpful from industry leaders like Morgan Stanley, Guardian, Forrester and Thomson Reuters.
8. Wealth of information
   A few of the top objections I hear about adopting social is that advisors don’t know what to say or that it takes too much time to create content. Independent of whether you agree with that objection, it is important to recognize that you can realize so much value simply by “listening” to what your network is saying. Did someone just take a new job? Get promoted? Did they recently get married? Perhaps they just found out they will be having a new baby. All of this information is valuable to an advisor and it is all sitting right there for you to consume on social networks.
9. Broaden the conversation
   Building a business as an advisor isn’t always about 529 plans, mutual funds, life insurance, etc. It often starts with building a presence in the community. Perhaps you’ve joined the local Rotary club. It starts with current events. You are at a friend’s party and start discussing the latest topic capturing the country or your town’s attention. Perhaps it’s a hobby. I still remember the first HD broadcast of The Masters. Amazing! The point is there are so many ways to “connect” with people on social networks. What may start as a discussion about triathlons may end in a fruitful, long-standing business relationship.
10. Relationships, Relationships, Relationships
    More than any other reason stated above, advisors and their firms should move on social because of the value it brings to your relationships. No other medium constantly keeps you connected to your friends, colleagues, clients, prospects and partners. It is a way for you to stay plugged in to what matters to your connections and gives them a mechanism to do the same. It will help you manage more relationships than you thought possible and in the process actually more meaningful ones as well. In today’s volatile market the world is going to have questions, your network is going to be seeking information, your clients will want to be assured. If you aren’t on social, you are missing an opportunity to further develop the most important relationships to your business.

I hope these 10 reasons provide valuable food for thought. As a bonus I have one more to share.

10.5 Social is a Journey, not an event
Social media is not a silver bullet and results don’t happen overnight. You will be starting a journey with your social initiative. One that will require in depth knowledge about the issues. One that will require you to evolve your processes. One that will require you to redefine how you do business. The key with this journey is that you take the first step – you have to start somewhere and I would suggest that you have to start today. If not, you risk losing ground to the competition, you risk unrealized opportunity, you risk losing clients, advisors and most of all you will look up one day and force yourself to scramble to catch-up. An approach that will likely cost you more in the long run.

I’m sure this is only a partial list, so feel free to add your own reasons below. We would love to hear your thoughts.

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.

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.

Syncapse came up with the figure by asking 4,000 fans of 20 of the top brands on Facebook — including Nokia, BlackBerry, Nike, Coca-Cola and Starbucks — why they were fans of those companies or brands, and about their past and future purchasing behavior. Syncapse then estimated what the value of each fan’s spending would be to a company, as well as the value of continuing to have that fan as a customer over time.

Obviously, this is a small sample size, and investment firms can easily argue that this type of data relates only marginally to financial services. Large investment firms may not have coupons, specials, or fun contests to promote via Facebook. However, for building a presence as a brand or an individual agent, keeping your name top of mind, regularly communicating about your own practice, and staying connected in such an easy way with people who have chosen to be your fan can be quite a valuable endeavor, indeed.

According to Syncapse, “A fan base is a self-segmented group of highly valuable customers.” The “self-segmented” part of the equation can’t be overstated – they have opted to hear from you. They are more likely to think of you – and recommend you – to their circle of influence. Consider these findings:

• Fans are 28% more likely than non-fans to continue using the brand.
• Fans are 41% more likely than non-fans to recommend a fanned product to their friends.

Syncapse has observed that an average fan may participate with a brand ten times a year and will make one recommendation; however, an active fan may participate thirty times and make ten recommendations. As a financial firm – and especially as an individual advisory or agent – these 10 or 30 interactions can have a dramatic impact on referring new business and retaining clients.

In fact, this research indicated that Facebook fans were more loyal to the fanned brand than consumers who were not fans. On average, Facebook fans are 28% more likely to continue using a brand than are non-fan consumers. This data illustrates the importance of the audience on short-term and long-term marketing efforts of an organization. In short, not only should a firm and an advisor work to gain fans – it’s also important to keep in contact with this audience.

As any advisor knows, word-of-mouth makes a huge impact on building a practice. While you attend networking events and sponsor local events to meet people in your area, Facebook can be a natural way to help your clients easily spread the word to their friends. Those who have specifically chosen to be your fan are 41% more likely than non-fans to recommend you to their social network.

So how should this data impact your daily life? First, it’s critical – and expected – that reputable firms and advisors have a social media presence. Once you set up your Facebook page, spread the word – encourage your own circle of influence, the ones who know and trust you most, to become your Facebook fan (done by “Liking” your page).

But – even more importantly – give them real value in being your fan. Of course, you can’t recommend hot stocks – but you can point to articles that have direct interest to your clients and prospects, or share blog posts, or ask questions that encourage discussion on your Facebook page – all within the parameters of corporate and regulatory guidelines.

While you may not be selling Coca-Cola, don’t underestimate the value of your online participation in social networks, and keep giving others reasons to pay attention to what you have to say.

At this point you are probably as shocked as I was. You may also be scratching your head as to how 1,700 people could like his update. What happens on LinkedIn is that when someone in your network “likes” a comment or status update it is automatically shared with that person’s network – instantly multiplying the reach each message has.

For employees who are looking to build their personal networks and for companies looking to build their brand within their business communities, this simple experiment shows how quickly a compelling message can spread throughout a network.  Unlike Facebook updates, where you need to be directly connected to someone, the majority of commenters and fans of Joss’ update have never met Joss face to face.

As a follow up message, Blair posted “Blair Joss is hunting for a professional in the oil and gas industry with experience in Reservoir Engineering and has a network in Norway.”  LinkedIn has clearly given him a platform to meet prospects, colleagues, and customers who may have never been connected to him otherwise, but given that he has a great message and a network that can spread it, he has truly taken advantage of the tools available to him.  How are you helping your employees spread their message?

Twitter awareness rivals Facebook. Awareness of Twitter has exploded from 5% of Americans 12+ in 2008 to 87% in 2010 (by comparison, Facebook’s awareness is 88%). And social network usage continues to grow among all age groups.

Twitter is used by approximately 17 million Americans – about 7% of the population. However, roughly six times more Americans maintain a profile page on Facebook than use Twitter. And almost 50% of Americans over the age of 12 maintain a profile on at least one social networking site, with the vast majority using Facebook.

Most Twitter users are “lurkers,” reading the updates of others without contributing their own updates – at least, not on Twitter. But 70% of regular Twitter users say they do post status updates to some social networking service (likely Facebook). Twitter appears to function as more of a broadcast medium compared to social network sites such as Facebook, still making it a key marketing tool for brands.

More than half of all Twitter users are between 25 and 44, signaling that most users are in prime decision-making demographics.

Business use cases for Twitter far exceed similar usage for social networking sites in general. The percentage of Twitter users who follow brands is over three times higher than similar behavior expressed by social networking users in general. As this graphic shows, Twitter users are more likely to follow brands or companies on social networks.

According to the study, “Significant percentages of regular Twitter users report using the service not only to seek opinions about companies, products and services, but to provide those opinions as well.”

In short, here’s more proof that social networks – and Twitter and Facebook in particular – are here to stay, and users are amenable to hearing from brands via these networks.

You can download the executive summary here for even more details. Don’t forget to grab our Guide on Twitter Social Networking Compliance and watch our webinar on the same topic.

In Penny Crosman’s recent article in Bank Systems & Technology, “Channel Innovation: Building Online Relationships,” she explores the variety of new consumers – and how they view banks and money.

For example, there’s a whole contingent of consumer that focuses on not consuming, such as “freegans” who strive to have no money and live “off the grid.” To reach this and other hard-to-reach markets, banks must up the ante on social and online marketing. For example, 18 to 30 year olds (Generation Y), a Cisco survey found, are heavily in debt, need help with their finances, and prefer communicating via their cell phones. They’re used to having Mom and Dad take care of the finances, and could use the most help from banks – but may not trust them as much.

The bottom line? Financial institutions must innovate to reach the hard-to-reach consumers; however, the good news is that half of all searches for financial products start on the Web, according to Terry Moore, Accenture’s North American banking practice lead. And online personal financial management is on the rise. These aggregators, such as Mint.com or Geezeo, help consumers keep track of budgets, discover new products, and manage accounts from a variety of providers in one place.

In a new trend, though, banks are building their own personal financial advice Web sites – sites that are nearly independent of the bank and that, in fact, barely mention the bank at all. For example, SunTrust’s Live Solid Network looks like a self-help site that could be associated with a women’s magazine.

Ron Shevlin, senior analyst at Aite Group, believes there’s a perfect storm creating demand for personal financial management tools, citing the recession, the regulatory environment and the impact of credit scores on consumers’ ability to get credit. “Consumers are becoming more aware and more diligent,” he says. “[Web sites such as] Mint, Geezeo and Wesabe have made these tools easier to use, and Generation Yers are more online friendly – they want to manage their whole lives, including their financial lives, online. And thanks to all these other factors, there’s a general dislike of banks. [Banks] realize that [personal financial management] can add value to the customer relationship.”

According to Jaidev Shergill, CEO of Bundle.com and a former Citi executive, it’s a matter of trust. “What’s really behind some of this can be summed up in one word: unbiased,” he says. “When you think about the way banks dispensed information and advice two or three years ago, it typically ended up in a sales pitch for that bank’s product. People started wondering if they were really getting the right recommendations.

1st Mariner Bank in Baltimore ($1.4 billion in assets), however, recently became the first bank to sign up with Geezeo’s white-labled online personal financial management, which lets their customers access their 1^st Mariner accounts as well as their other financial accounts from one site.

Steve Kruskamp, e-commerce marketing manager at 1st Mariner insists that online personal financial management “creates a tool that makes the relationship more sticky.”

Additionally, social media is a big part of 1st Mariner’s efforts to attract and retain younger customers. Kruskamp blogs and participate in social media networks regularly. Kruskamp posts messages and videos, including information about upcoming events and industry news, on behalf of 1st Mariner on Twitter, Facebook and YouTube. In fact, a year ago the bank introduced a checking account for Gen Y based on feedback received in social networks.

“We look at Twitter as an extension of communication with our customers,” Kruskamp says. “You no longer have the number of customers coming into the branches and having a one-on-one relationship with the managers. So we wanted to see if there was a way that we could get back those relationships that are somewhat lost. Twitter, the blog and Facebook offer a channel where our customers and prospects are already there.” The bank doesn’t use social media to market products but rather to carry out overall public relations, Kruskamp emphasizes.

Twitter lets 1st Mariner connect with local businesspeople and industry peers. Facebook, however, is more of an opportunity for the bank to interact with customers and prospects in a more social setting, where the bank shares pictures, promotes fundraising efforts and personalizes the brand.

“Facebook brings a transparency that didn’t exist before,” Kruskamp suggests. “Unless someone came to our back office or one of our picnics, they wouldn’t see what we’re doing, that we really enjoy what we do.”

Kevin Lynch, SVP of e-commerce at 1st Mariner Bank, stresses that social media efforts are inexpensive compared to traditional channels and they’re increasingly necessary. “The branch transaction level is continuing to decline, call center volumes have dropped from 65,000 to 70,000 calls a year to 59,000 or 58,000,” he notes. But 1st Mariner’s online customers more than doubled, from 2,500 in 2008 to 5,500 in 2009. “People are interacting with us, that’s the business case.”

Like 1st Mariner, Atlanta-based SunTrust Banks ($172.7 billion in assets) is experimenting with both online PFM tools and social media. The bank’s mostly anonymous LiveSolid Network, which primarily targets 25-to-45-year-old women, went live Feb. 1. Broud Koun, director of digital marketing and direct mail, observes that the demographics of social media sites are sometimes surprising. “It would be incorrect to assume that Facebook, for example, is all about 19-year-olds,” he says.

Not every bank is jumping on the personal financial management bandwagon, however. A recent Aite Group survey found that only one in five banks overall — and only one in 20 large banks — offers online personal financial management. (Of the remaining firms, 60 percent said they will evaluate whether to offer such tools in 2010.) They cite lack of perceived demand and a hard-to-define return on investment.

For 1st Mariner Bank’s Lynch, however, the more important question is whether a bank can afford not to have these personal financial management tools. “Our perspective,” he says, “is that this is a requirement that customers may not know they need yet, but they will.”

“It’s the dumbest policy in the world to block your employees from going to social media sites,” said Mark Ragan, a Chicago-based corporate communications specialist. “You get Gen Y entering the workforce, and those people live on Facebook. … They’ll laugh at you.”

Does this bring back memories from the 90’s when the Internet started penetrating businesses? How long did companies resist? What about email? How long was your organization able to resist that movement? Then came instant messaging, then text messages and now social media. History is repeating itself all over again and the companies that get social first will separate themselves from the pack, both in the eyes of consumers and in the resulting profits.

As I pointed out in my previous blog post, “10 reasons you should use social networks for business,” an Accenture survey of Millennial preferences found that recent grads prefer to communicate via instant messaging, text messaging, Facebook and RSS feeds. One Millennial MBA said, “I need to access my Facebook in order to do my job.” Shut down access to social networks, and you may shut down access to top employees.

“I think there’s a greater risk not to” give employees access, said Mary Henige, director of social media and digital communications for General Motors. “If you want to be an employer of choice, especially with younger people, they’re going to completely expect to do this.”

The connection coefficient remains in full effect. The more connected employees are (to other employees, partners, customers, prospects, etc) the more value the employees and therefore the enterprise will experience. This applies in all areas of business – recruiting, marketing, and even sales. In fact, a July 2009 study by the Altimeter group found that brands deeply engaged in social had an “18% increase in revenues over the last 12 months, compared to the least engaged companies who on average saw a decline of 6% in revenue during the same period.”

“One of the things they’ve talked about is how e-mail was looked at 10 years ago — as risky — and now it’s accepted so much as a business tool,” said Kristen Cislo, branch manager for information technology staffing company Robert Half Technology. “Are we going through the same thing with social networking?”

In short, lines are blurring between business and personal use of social networks so companies that want to keep increasing sales, attract the top talent and meet customer expectations shouldn’t shut down these activities. Instead create your policies, be upfront with your workforce and customers, and automate your policies so everyone wins.

Some of the topics discussed were:

- Implications and questions of FINRA Notice 10-06 for financial advisors.

- Whether or not financial advisors will get value out of social networks.

- How you should treat personal vs. professional data while on these social networks (check back soon for a detailed blog post on this topic).

- Whether this new channel will overload the compliance department.

- Why firms and advisors are having a hard time understanding the compliance issues.

- Why firms are racing to adopt social media.

- Whether or not these are just tools for the younger generation.

- Best practices for advisors to get the most out of their social media investment.

- How long it takes to get a program up and running so advisors can start leveraging these sites.

I hope you enjoy the discussion and I look forward to seeing you at the CFDD conference in October.