Clients expect active web presence

Financial advisers who ignore the social-media trend will be left in the dust, according to Jennifer Grazel, global head of category development for financial services at LinkedIn Corp.

While independent advisers less encumbered by corporate compliance issues have been the most aggressive adopters of social media to date, Ms. Grazel said the wirehouses are rapidly coming up to speed.

“The wirehouses realize in order to compete, they do need to enable social-media access,” she said. “Customers expect companies to have a presence and to be active on social media.”

InvestmentNews: How well do you think the financial advice industry overall is utilizing and benefiting from social media?
Ms. Grazel: We did a survey last year looking at high-net-worth investors and advisers, and we saw a big uptick in adviser growth on our platform.

What we saw was that when investors were asked how many of them actually connected to advisers via social media, less than 5% said they connected that way. But when asked if they find value in social media, 52% of investors said they do. That shows a big opportunity for advisers to tap into social platforms. It’s a great way to identify prospects.

InvestmentNews: What percentage of advisers would you estimate are using social media in some capacity?
Ms. Grazel: We believe that seven out of 10 advisers are using social media for business purposes. And of that 70%, we know that 91% are using LinkedIn, specifically.

InvestmentNews: Is there an area or segment of the financial services industry that appears to be leading the way in terms of social media?
Ms. Grazel: In terms of the financial service sector, I think retail credit and deposit businesses are leading the way. The banking and credit card side. It’s beyond just a servicing tool for companies like American Express and Citi.

InvestmentNews: Are there any areas of financial services that stand out as lagging in social-media innovation and adoption?
Ms. Grazel: It goes back to regulatory issues, but in particular, I’d say the life insurance and annuity sides have been slower. They don’t want to be among the first movers because of [the Financial Industry Regulatory Authority Inc.] and general regulatory concerns. But I will say we have seen progress.

InvestmentNews: What advice do you have for financial advisers who are not currently incorporating social media into their businesses?
Ms. Grazel: My key advice would be that I know it’s been a risk-reward-type situation, but when looking at the mass-affluent market, social media is a key part of their decision journey. To get started, our recommendation is to have a profile and brand identity on LinkedIn. Showcase an area of expertise in your profile. That’s a safe way to at least get started.

InvestmentNews: Any examples of where social media might have hurt the financial services industry?
Ms. Grazel: This will be the five-year mark of the financial crisis, and new rules of engagement were mandated. I don’t think social media has hurt the industry. But there are cases when a company might not deal with an issue effectively and it blows up. Not having a presence probably hurts you more. The risk is not outweighing the rewards anymore. Customers expect companies to have a presence and to be active on social media.

InvestmentNews: Can the regulatory framework keep up with the constant and fast-paced developments in social media?
Ms. Grazel: I think the regulators are actively involved in the conversations, and they’re looking to be engaged. And there are a number of requirements that might be somewhat outdated, but there are active conversations.

My thinking is, considering the traditional nature of the way regulators operate, it is difficult for them to keep up. I don’t know how they are addressing it internally, but at least they are participating in the conversations and are soliciting insight. There is still a lot of room for improvement.

InvestmentNews: Do you think regulatory and compliance issues prevent some financial advisers from embracing social media as part of their practices?
Ms. Grazel: We found that independent advisers were definitively the first movers when it comes to social media, mostly because they can be more agile. Meanwhile, there has been more infrastructure needed in the wirehouses. But the wirehouses realize that in order to compete, they do need to enable social-media access. So they are catching up.

InvestmentNews: Any advice for how a financial professional can or should balance the social and professional aspects of the various social media?
Ms. Grazel: That’s why there are various social platforms. My Facebook page is very personal. I don’t intermingle, because the various social media are used for very different purposes.

There’s definitely a clear distinction between professional and personal platforms. Of the three predominant platforms, I would say LinkedIn is a professional platform. Our mission is basically to create opportunities for members on our platform.

Facebook is considered more of a personal network. Twitter kind of plays in both spectrums.

In terms of best practices, I think it’s important to understand the mindset of your social network connections.

InvestmentNews: Do you think the recent controversies over the federal government’s monitoring of Internet activity will have an impact on the popularity or expansion of social media?
Ms. Grazel: Actually, quite the contrary. Because social media has evolved into the primary source of news, networking and transactions, consumers are more engaged than ever.

InvestmentNews: Can you provide some sense as to where you think social media is heading?
Ms. Grazel: When it comes specifically to wealth management, I think with the emerging mass affluent, social media is core to their decision journey. It’s really going to become an everyday way in which people make decisions. And it will become increasingly important. Companies are aware of this, and they are looking for ways to integrate brands and become more relevant through social media.

The trend is continuing to grow.