Is the Financial Service Industry Bearish on Social Media? A Bear’s Perspective: The Glass is half empty for Financial Advisors
A Bear’s Perspective: The Glass is half empty for Financial Advisors
At a brand level, and on a customer service level most big financial institutions have embraced social media. But, they have lagged behind in granting the power of social media to their distributed sales forces. Aren’t they the ones who keep the lights on?
Have you figured out what the number one reason why the financial services industry is bearish on social media? Because, I haven’t. If you already know, stop reading and share with us your thoughts in the comment section. I want to know. If you are as perplexed as I am, at the end of my diatribe, decide for yourself if the reason is among the areas I cover. In any case, be sure to share your thoughts with our readers in the comments section below!
Is the number one reason why financial institutions are bearish on social media compliance? Maybe. FINRA, SEC, NAIC, and CFPB oh my! It’s a good argument—why would a financial institution want to get fined for something that they don’t understand? For compliance sake, how would they know what to do? The regulators keep changing and revising their policies, and revising them again, and again. How can a financial institution, let alone a financial advisor, keep up?
Who is the Business Prevention Unit? Is the Compliance Department to Blame?
This is absolutely crazy, but here is a possible solution. I hear stories that FINRA wants financial firms and institutions to reach out to them so they can work together to figure out this social media stuff. Financial institutions and FINRA working together in harmony to develop some real-life social media case studies to shape social media policy. I hear the financial institutions now, “Really, you want me as a financial institution to be proactive and voluntarily go to the regulators? I understand what you’re saying, but I can’t believe that’s something the financial institution really wanted to go to the regulators, volunteer to be a case study… We’re not fully buckled down with traditional media. We can’t go to them so they can look at us and see what we’re doing internally, I don’t want to open up that can of worms. Why would I want to invite in a regulator? It doesn’t make any sense. Not to me it doesn’t.”
Regulation aside, financial institutions want to protect their brand. Listening in again on their conversation: “Brand Reputation is big for me, why would I want all of my reps out there Tweeting? Posting and texting and messaging and doing all sorts of social sales stuff?” I mean, they are pushy right—we are trying to push our commoditized product. So why would we want to push product where everybody can see it, and be recorded forever? What happens if the collective “we” messes up? Everybody in the world will be there to watch. Why would we want to do that? Who is really listening on social media anyway? Employees, competitors, clients, prospects, everyone? Well, if we started talking on social media, I hear you can’t control the conversation. I can’t get over that. If I can’t control it, the conversation can and won’t be safe. If a social media fire started, how do you put it out? Once you say something stupid, you can never take it back, you need to live up (or live down) to what you said and honor your actions to make it right.
Additionally, aren’t their legal ramifications for financial institutions and advisors? What’s at risk? Social media puts the multiplier effect on personal versus professional. Is the employee they hired the same person (business or pleasure)? With social networking, the lines are more crossed than ever. For example, who owns the social accounts if we allowed them—the company or the employee? They might spend time working for us just to run away with the information and the relationship. Reference this enlightening article from the Wall Street Journal: Covering a dispute over who owns a Twitter account, and a similar fight over a LinkedIn account.
It’s getting kind of hairy; maybe it’s better if we turn the other cheek and look away, we won’t notice all of our financial advisors who are already using social media on LinkedIn, Facebook, Twitter, Youtube, Google+, and Pinterest. I mean, they are on there for personal reasons, right? We can’t prevent them from bringing those “smartphones” into work anyway. If they do happen to get new business from it, good for them (I mean us).
FINRA Suspends Advisor
Just say we did want to embrace social media, it would be easy to implement, right? David B. Armstrong of Monument Wealth Management said in reference to social media, “If you are Series 7 registered, you should already know what to say, and what not to say.” That sounds about right. It’s just a new way to communicate. We’ve been in the same industry for years. That’s a good thing because we don’t have the time or the inclination to educate our advisors on social media. Oh, wait, slow down. Did you see what happened to her? She was Tweeting, promoting, pumping, and dumping stocks on Twitter. We can’t control our reps, why did we hire them?
Read more later about her case, if you want to know what not to do… FINRA Suspends advisor for social media communication. Bottom line, Know your customer. Don’t blast buy or sell recommendations to random people.
Then again, if we did allocate the resources to training, like I mentioned before, we just don’t have the time. Honestly, why would any great sales manager take time from activities that are already working and bringing in business, to suddenly change an advisor’s structured activities to add in a medium that is not yet proven, at least in our eyes? I can’t see the justification for our established representatives. Additionally, how do you monitor it all? How well have we monitored traditional media—are we exposed? Our monitoring was never 100% and never will be, we are fallible. Social media can’t really be a gift to the compliance department; everything can’t be recorded, achievable, traceable, trackable, measurable, right down to its origin, right?
When you think about it, there is only close to 1 billion people on Facebook, and another half a billion on LinkedIn, 300 million on Twitter, and God knows how many people are on Google+ these days. So if there are over 1 billion people on social networks, that means there are 5 to 6 billion people who aren’t using social media, especially for business. So why should we?
Even if we do use social media, the people with money, those boomers, they’re not using social media, are they? What interest do seniors have in using social media? There isn’t an entire cottage industry teaching our most profitable demographic on how to use social media, is there? I mean the fastest-growing segment can’t be among 55-year-old woman on Facebook, right? It must be a fluke that my 68-year-old dad just bought an Amazon Kindle Fire, what’s he going to do with that? Generation Y are getting older (which means they’re accumulating more money), but anyway everybody’s not utilizing social media, so why should we?
How we used to communicate, and still should
Time, time, time—we don’t have time like I mentioned. We have all of these other operational activities that we have to do. Why in the world would we take time from prospecting strategies that are working, like knocking on doors, in person meetings, client appreciation events, seminars and the telephone? I mean, the telephone still works right? The telephone has been closing down business since 1876, and besides, the phone went mobile in 1973. Production, is sure to go down. As it is, representatives have so many different activities and responsibilities. They don’t have time for one more dial, let alone social media. Hey, I love my corner window office—I don’t want to be a social mobile advisor. Besides, we don’t have to worry about any FINRA 10-06, 11-39 regulation on the aforementioned modes of communication, right? How compliant is all of the other media (The social in-person meeting, social phone, social letter, social e-mail, social fax, social seminar, social water-cooler talk, social bar, social seminars, social client appreciation events, social everything) we’ve been using? Even though we don’t have a social media policy, I guess we are no stranger to similar internal and regulatory policies for, record keeping, archiving, suitability (Know Your Customer), communications with the public, advertising, supervision and endorsements. We just started using email, how different can social media be?
Again, I’m not going to do something that I don’t know how to do. I don’t have the time to take away from producing activity to a non-producing activity and, I don’t really have the time for an education; those days of continuous learning are over. I’ve been doing this for years. I have spent hours and hours getting my CFP, and my Masters and all of these other NASD designations and licenses. I’m not going to spend time on social media, not me, no way. Social media is for kids, right?
I’m not registered to sell in all 50 States; there aren’t any boundaries on social media. All I know is that I’m not risking my licenses and reputation and getting in trouble on social media. I’m not putting myself out there, no way, no how. So what if everybody is going mobile and will be able to find me if I put myself out there to be found? Come on now, we can’t rely on the Internet, let alone social media. What if the Internet crashes—what happens then?
But then again, where’s the return on investment (ROI)?
I plan on getting a nice return (viewership) on ignoring the topic of ROI. My next blog post will be dedicated entirely to exploring social media ROI for the financial services industry.
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I invite you to share your thoughts below:
I really enjoyed reading this post, mostly because I’ve been hit with all of these reasons – regulations, distrust of staff, demographics, time – and I think the answer to each one is education and training.
Working with boards and senior management to explain the role of social media in communications today, with examples of how organizations are successfully utilizing the channels. (I like to call this leading them down the path to a logical conclusion).
Working with employees to make sure they understand the rules (the rules haven’t changed, the channels have). The case you linked to was so interesting because the advisor in question was violating rules that she had to know where in place. If I understand it correctly, the violations came to light BECAUSE of social media. They weren’t caused by it. (She had probably been recommending stock and making similarly inflammatory statements pre-Twitter, but never got caught).
And, in the end, sitting down with all the naysayers and answering their questions, and tackling their roadblocks one-by-one, until they realize that all of these issues are totally manageable.
Looking forward to your next post about ROI!
Kristin Brandt – Sundin Associates recently posted..Why I [heart] working in advertising
Thank you for reading. You are exactly right with respect to the social media example I highlighted. Social media bubbled the problem to the surface. You can’t hide in the social media World. Without it, she could still be pumping her stock to her offline audience. Thank you again!
Great stream of consciousness of exactly why financial services is slow to move.
1. Risk
2. Regulation
3. Control of message
4. Entrenched behavior patterns in the executive ranks
Most of the responsibility of changing the mindset and willingness falls on the agencies selling the services – and many of us when faced with the long list of considerations you listed decide to stick with our adventurous CPG, Entertainment and even pharma clients. All that education we have to do to pry some marketing dollars out of the financials services targets for a pilot that takes as much work to execute than a full-paying client – no margins there.
I believe the solution will be technology. These FS companies need a single platform that tracks and controls every social media action taken on behalf of the company. Only then will they shift significant dollars – and by the way a closed loop social marketing platform will also solve the need for ROI.
The tech does not exist today. There are some doing bits and pieces of it (buddymedia, vocus, lithium, socialchorus, radian6, many many more).
If you know of any SaaS platforms that are getting close to an all in one solution I’d love to learn about it!
John
Thank you so much for your detailed comment. You are absolutely right, many of the aforementioned companies don’t offer the full suite of services a regulated company would need. But, that still should not be an excuse. Big financial institutions, layer technology, on top of technology, on top of technology, all the time. There is no perfect CRM, Social CRM or SMMS, but like all other technology, that should not be an excuse to not use it, how can it get better? If you include Salesforce with Radian6, you get closer. The company I used to work for Engage121, had a really good marketing tool, but did not promote their compliance capabilities, and approval controls that they had built. I hear socialware is working on some new technology, working with MSSB, hearsay social is making a good attempt. A good SMMS provider will work with the financial institution to make the technology workflow process efficient and effective. Smarsh and Arkovi also do archiving.
Thank you again for your comments. I would love to learn more about what you do =)
I wanted to thank you for this excellent read!! I definitely loved every little bit of it. Cheers for the info!!!! & this is the perfect blog for anyone who wants to know about this topic. You know so much it’s almost hard to argue with you ………
Thanks
Kevin Parker recently posted..Why choose payday loans?
Thank you! I’m still learning as the space continues to evolve. Social is communication, and social is now a way to communicate. We are in a conversation economy lead by social media!
Remember the old saying about when there is a will there is a way? In other words, while I agree with your assessment completely, the bottom line is that many in our industry remain short-term focused and therefore don’t understand 1) that creating any sales opportunities via social media takes a long time; and 2) more importantly, they are missing the point that the greatest uses for social media in our industry our client servicing and brand extension.
Fidelity and Oppenheimer, for example, have been touting the success of recent social media campaigns that focus on issues unrelated to their funds – yes, unrelated to their funds – it has been all about brand awareness.
So, in my humble opinion, if more people in our industry understood the wide range of applications for social media, they would stop making excuses!
Thank you Andy for your comment. I agree with your humble opinion. It’s not just about tweeting, liking and posting, it’s about connecting with your target audience. It’s about caring about your target audience. Social media can (and has) helped firms locate, win, grow and retain business. It’s powerful!
Rich LoPresti recently posted..Social Media Scores a Touchdown!