Unlike some of its competitors, independent broker-dealer Raymond James Financial Services Inc. has embraced social media and encourages its 3,300 reps and advisers to use it.
The motivation behind the firm's recent push for reps to use outlets such as LinkedIn, Facebook and Twitter derives from a fundamental element of the investment advice business: communication with clients.
The buzz in the securities industry is that reps can use social media to snag new clients, said Mike White, director of marketing for Raymond James Financial Inc., the independent B-D's parent company. But that notion is perhaps misguided, he said.
“Social media is just a tool,” Mr. White noted. “As long as we don't say how many new clients this will get each adviser, we'll be OK. Instead, we are asking, "How does this support the advisers' existing work?'”
Social media “really is an extension of a communication and marketing strategy,” Mr. White said. “This is social media as part of an existing marketing and business plan.”
In November, Raymond James formed a partnership with Actiance Inc. to provide financial advisers compliant access to social-media networks.
Through Actiance, financial advisers can use social media to connect with clients and even prospect for new ones while still being compliant with the rules of the Financial Industry Regulatory Authority Inc.
“Advisers can choose from a host of preapproved topics that have already gone through compliance,” Mr. White said. “But they also have the flexibility to write their own content. It's important to have both. Advisers want to reflect their own brand, but they shouldn't have to re-create the wheel.”
Many independent broker-dealers are trying to keep advisers' use of social media at bay, industry observers said. However, the industry eventually will move toward social media, one regulator noted.
“For just as many that say they are not doing social media, there are huge numbers of firms that are piloting something,” said Richard G. Ketchum, chairman and chief executive of Finra. “There's been significant steps in technology with respect to [vendors'] providing services for search vehicles” that would allow a firm's compliance department to keep an eye on advisers' communication on LinkedIn or Twitter, he said.
“My guess is, in a couple of years from now, the industry will have made dramatic steps forward” in regard to such compliance, he said. “My prediction is that there will be a reasonable cost structure for both large and small firms to use social media within a year or two.”
It took Raymond James about three months to get its program launched, Mr. White said. “The firm started with self-assessment, which asked: How do we see advisers using this? What type of support, infrastructure, would we require?”
“Then there was the due diligence to find the right vendors,” Mr. White said. “That was followed by trial groups of small sets of advisers to make sure it worked. The bulk of the effort was 12 weeks. Of course, we were thinking about it for a while before that. The main focus now is the training and educating of advisers.”
Mr. White declined to disclose the amount of money Raymond James has spent on the project.
The payoff for advisers is their increased presence on the Internet, he said. “Social media helps enhance search engine optimization results. What comes up can serve as a point of validation.
“If the adviser doesn't show up at all on the web, he or she might get business, but increasingly, people are making decisions by incorporating web results,” he said. “Not being on the web can hurt advisers, and social media is another piece of the puzzle.”
“Some firms are going very slow,” Mr. White explained. “That reflects either conservatism or skepticism. We think web-based communication is increasingly important. We can't be "in person' with clients every day, but we can communicate with them every day.”
Raymond James doesn't look at social media as a silver bullet from a sales standpoint or communication standpoint, Mr. White said.
The 1,500 or so advisers using social media are not “opening tons of new business, but it's a way to enhance communications with clients. It's another set of touch points for the adviser's brand. In a topsy-turvy day, you can tweet or e-mail as opposed to making 100 phone calls.
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“The biggest thing is keeping social media in perspective. Ten years ago, people predicted that the Internet would doom financial advisers. But the adviser is still central to the relationship.”
— Mike White
