Some interesting new financial- adviser-specific data are coming out of Twitter by way of Texas Tech University. It isn't about tweets, but research based on analyzing all those tweets.
“We've seen evidence of in-creased tweet frequency between advisers and clients, and we think that it points to a need among advisers to communicate immediately with clients,” said Michael Finke, a professor in the Department of Personal Financial Planning at Texas Tech.
Last year, he and graduate assistant Tao Guo found significant correlation between tweets by advisers and the ups and downs of the S&P 500. In a nutshell, they found that advisers sent out significantly more tweets when the S&P 500 dipped in value by at least 2% than when it gained ground.
Real-time client communication, in other words, was slanted a bit in favor of the negative.
As with the preliminary results reported in mid-2012, continued analysis indicates that modest traffic spikes when market movements are negative, and especially when those movements are both large and negative.
“This could be part of the value- added by advisers who are able to use social media as a way to help clients maintain their portfolio allocation over time. And Twitter, for many advisers, appears to provide a level of instantaneous communication,”†said Mr. Finke, though similar data for Facebook, LinkedIn or other sites have yet to be analyzed.
Researchers also noted a correlation of low Twitter traffic attributable to the holidays, and what appeared to be a reduction based on action taken by the Securities and Exchange Commission on Jan. 4, 2012. That was when the SEC charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn.
At that same time, the SEC issued two alerts in an effort to highlight the risks that investors and advisory firms face when using social media.
“Looking at tweet frequency, there was a nadir at the end of 2011 and early 2012, and then volume went back up again,” Mr. Finke said.
The data comprise aggregated tweets fluttering out into the ether from advisers to their followers, at least those tweets archived by Arkovi, a service acquired in September by RegEd Inc., the well-known compliance education and services firm.
That data set includes an average population of about 120 active adviser tweet posters and covers the period between November 2011 and last May.
I have written dozens of stories about social media and hosted several webcasts on the topic. Mostly, they focused on the medium's potential for replacing an adviser's traditional marketing processes or on the pitfalls of compliance — or tools to help address those pitfalls.
With this new research, we can expand our understanding of social media into a kind of industry snapshot to reflect the multiple uses that advisers are finding for this communication tool.
During their national conference a week and a half ago, the folks at TD Ameritrade Institutional an-nounced their intent to launch a free, web-based version of iRebal, the venerable — and to date, fairly expensive — automated portfolio re-balancing software program.
I recognized the boon this would be for advisers who hold most of their client assets in custody at TD, especially for those who currently have no re-balancing tool. And how can you beat a price point of free?
On the other hand, I was a bit frustrated at having to explain to a number of advisers and some fellow members of the press that this was no across-the-industry re-balancing silver bullet.
So to clarify, advisers who use TD Ameritrade Institutional as their custodian will be able to use an embedded version of iRebal at no cost through TD's Veo account management system.
The first advisers will begin getting access to this feature “sometime in the mid- to-late summer time frame,” said Ben Welch, director of adviser business development at TD Ameritrade.
The major point that needs to be reiterated is that iRebal is being integrated fully with TD Ameritrade Institutional's Veo adviser platform — meaning that it will give registered investment advisers single-click access to its re-balancing function only through Veo. In other words, advisers who also have client accounts held with Fidelity Institutional Wealth Services, Pershing LLC, Schwab Advisor Services or other custodians won't be able to re-balance accounts there using the Veo version of iRebal.
“Right now, we are really focused on getting the Veo version out, though it is a possibility down the road,” Mr. Welch said, referring to offering a custodian-agnostic online version of iRebal.
“For now, though, there remain a lot of advantages in embedding it: no need for import/export of account data, access to current market data [and] current positions, and other goodies like being able to tie it into the alert system and proactively deliver that to advisers,” he said of the current Veo-only plan.
Mr. Welch reminded me that the custodian-agnostic desktop version of iRebal that has been around for years still is available.
It isn't free, though.
That version of iRebal comes with a one-time setup fee of $10,000. Thereafter, the annual software licensing fee is based on a firm's assets under management and starts at $20,000 for firms with less than $450 million in assets under management.
Using either version of iRebal, advisers will be able to perform tax-sensitive automated re-balancing across multiple accounts at the family or household level. They also will be able to handle cash management and directed trades, as well as tax loss harvesting and single security re-balancing — and receive team support.
It is just that the Veo version of iRebal will apply only to accounts held with TD.
iRebal is a product of ThinkTech Inc., a wholly owned subsidiary of TD Ameritrade Holding Corp., which acquired the firm and its application in January 2007 — seemingly more than enough time for TD to have created a fully capable system. I have been chided many times, though, for not taking into account the technical complexities inherent in the endeavor.
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