Hampered by firms, most advisers rely on self-marketing

Many B-Ds don't allow brand building, a focus of social media

Nov 14, 2010 @ 12:01 am

By Liz Skinner

Financial advisers seeking to improve their relationships with clients following the recession find themselves battling their own firms, according to a new survey.

Advisory firms often block advisers from using social media that could help them build their businesses and market their “brand,” advisers said. Additionally, firms haven't done enough to try to restore faith in the financial services industry, and they are encouraging advisers to offer complex products that the adviser sometimes doesn't understand, some said.

According to a survey conducted by HNW Inc., about 76% of the adviser respondents said that they rely on their own marketing efforts more than their firms' promotions. HNW, a marketing consulting firm that focuses on wealth management companies, surveyed 623 advisers in August.

Advisers — including about half the 400 respondents from large brokerage firms — increasingly rely on their personal brand rather than on their corporate identity to market themselves.

About 70% of respondents don't use social media such as Facebook, LinkedIn or Twitter as a tool for doing business and marketing themselves. Nearly eight of 10 advisers said that company regulations make it too burdensome to use social media, 70% said that their firms won't allow it, and 50% said that they aren't even sure how to implement social media into their marketing efforts, according to the survey.

Of the 30% of advisers who use social media, the No. 1 use is to build their personal brand, said Stacey Haefele, chief executive of HNW.

“They are realizing they must position themselves, especially if they are trying to prospect for new clients,” she said. “If you don't have a profile on LinkedIn, it's almost as if you don't exist.”

The financial services industry needs to find reasonable ways “to test the social-media waters” because clients are already there, Ms. Haefele said. An HNW survey 18 months ago of people with at least $1 million in investible assets showed that 30% had a Facebook page.

“The limitations on the use of social media to communicate with clients and prospects are remarkable at a time when so many of their clients themselves use social media,” Ms. Haefele said.

Hewins Financial Advisors LLC, which manages $2.3 billion in assets, is helping all its advisers set up professional profiles on LinkedIn.

“It's important to be on this professional network because many of our clients are professionals,” said president Roger Hewins. He said advisers also will be creating blogs.

“The challenge is creating content that is interesting and useful,” Mr. Hewins said.

Making sure that online communications comply with securities regulations is a priority, he said. The firm pushed its compliance team to help them vet and develop social-media outreach.

“We encouraged our compliance people to tell us how to do it correctly, not to tell us not to do it,” Mr. Hewins said. “That's an advantage of being a small firm.”


The HNW survey also showed that advisers think that their employers and the industry as a whole aren't doing enough to repair the reputation of the financial services sector, which has suffered along with the U.S. economy.

About 84% of advisers ranked “lack of trust in the financial services industry among consumers” as their top barrier to achieving personal success.

David Tittsworth, executive director of the Investment Adviser Association, said he thinks the damage that broker Bernard Madoff caused to the industry's reputation with his giant Ponzi scheme lingers.

“The effects of Madoff are going to be felt for years and years to come,” he said.

Advisers have had to spend a lot of time with clients over the past two years, reaching out to them and reassuring them that their finances are in good hands, Mr. Tittsworth said.

In fact, 89% of the advisers in the recent HNW survey said that their clients are requiring more time and attention than they did before the economic crisis.

About 60% of the respondents said “products that are too complex to understand, even for industry experts,” are a factor limiting the success of their practices.

This suggests that the education and training needed to understand the differences between complicated instruments that are being used to manage wealth today — such as actively managed products and exchange-traded funds — aren't always happening, Ms. Haefele said.


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