Fear of running afoul of regulators continues to dampen adviser participation in social media. Obstacles remain in place for advisers who want to use social media as a means of developing their voice online, establishing their brand, driving referrals and engaging with their clients.
An InvestmentNews survey of more than 450 advisers regarding social media usage and policy found that the biggest obstacle to using social media was uncertainty over compliance and regulatory issues, with 55% of respondents stating that such issues were their primary challenge when using social media for business purposes. Couple that confusion with outright firm-level bans on certain networks — 55% of advisers in the same survey say that their firm bans at least one network — and a grim picture emerges. One of an industry where one out of every two advisers is either forbidden from at least one social network, or daunted enough by regulators to avoid social media altogether.
Many firms have stricter rules than necessary, and wirehouses have been among the slowest in the industry to adopt standards that allow advisers to fully utilize social media. Morgan Stanley Wealth Management, for example, just gave their advisers the go-ahead to write their own Twitter content. Prior to that, only canned content was allowed. Wells Fargo Advisers has a pilot program that allows about 20 of its more than 15,000 advisers to write their own tweets, which must go through an approval process before they go out, according to a spokesperson. Bank of America Merrill Lynch does not allow self-authored tweets. Despite the abundance of caution, regulatory actions against firms have been sparse. Finra, for example, has only brought a handful of actions over social media violations.
Meanwhile, among advisers who do use social media, 40% of those responding to the InvestmentNews survey only use canned content, and just 33% formally incorporate social media strategies in their marketing plans. And while advisers under 45 are, unsurprisingly, the most active users across every social network for professional purposes, they are the least likely to use social media among all age groups to prospect for new clients. Young advisers are less likely than advisers between the ages of 45 and 55 to seek new clients via social media, in all likelihood because they are also the most likely of their peers to be uncertain over compliance and regulatory rules. The top reason young advisers give for using social media professionally is to network with their peers, an area less likely to draw scrutiny.
Another recent InvestmentNews survey noted the latent potential for social media in the gap between professional utilization of social media among advisers and investors. Advisers were between 8% and 15% less likely to use major social media outlets in their professional lives than investor respondents. Among investors under 45, the spread was between 12% and 21%. Advisers did, however, accurately track the importance of social media in the future relative to investors, underscoring the fact that while advisers correctly understand the importance of unlocking social media in today's landscape, they have a long way to go before fully realizing its potential.