Social media eventually will become a key tool for wirehouse financial advisers to develop new business and serve existing clients. But it also carries enough compliance and regulatory risk that the big Wall Street firms remain cautious about letting their advisers tweet, friend and connect with clients.
Morgan Stanley Smith Barney LLC, the largest wirehouse, with more than 17,000 advisers, has been a trailblazer among Wall Street firms. But even MSSB is taking a relatively conservative approach in comparison with the registered investment advisory community, which is embracing social-media networks more fully.
“There is a much larger reputation risk for a firm like us, compared to the RIAs,” said Lauren Boyman, director of social media at MSSB. “We also have a research side to our business, with specific rules about what we can and can't say publicly.”
Nevertheless, the firm is forging ahead. Last summer, it launched a pilot program involving 600 advisers at the firm, who were given full access to LinkedIn and more-controlled access to Twitter.
The advisers were allowed to tweet material produced or preapproved by the firm, or submit their own material for approval. It has not yet allowed any advisers to use Facebook. (Ms. Boyman declined to comment about Facebook because of her firm's role as lead underwriter for the initial public offering.)
“Social media can change the way people interact with their advisers, beyond the quarterly meetings and portfolio reviews,” Ms. Boyman said. “It may take time for advisers to get up to speed with the tools and to use them effectively with clients, but it's a big opportunity.”
Ms. Boyman and others at the firm are assessing the results of the pilot program. She said most of the advisers in the program used the social-media sites to prospect for new clients, and the early returns are encouraging.
The instant electronic Rolodex that is LinkedIn is their favorite network. Of the 600 advisers, 27% said they had landed new clients through LinkedIn.
“We have 60-year-old advisers saying they wished they'd had this tool when they started out in the business,” Ms. Boyman said.
Fay DeBellis, 47, an MSSB adviser based in Minneapolis, has been on LinkedIn for the last three to four years and recently has begun composing her own Tweets and submitting them for corporate approval.
She credits LinkedIn for helping her win a $6 million nonprofit account — her first in a market she is now targeting. Since then, she estimates she's signed up another $10 million in accounts with which she first connected through the network.
Ms. DeBellis is all business when it comes to using the site. She ignores a lot of requests to connect with people, choosing not to communicate with colleagues and competitors over the site.
“I don't view it as a social network,” Ms. DeBellis said. “I use it for work. It already takes so much time to manage from a work perspective anyway.”
As part of her prospecting strategy, Ms. DeBellis pores through her connections — and their connections — for the names of potential clients. Once she identifies one, she asks her connections if they'll make “warm” nonelectronic introductions for her.
NEXT CHALLENGE IS TWITTER
Ms. DeBellis is a little less convinced about the usefulness of Twitter. “I struggle to understand the "what' and the "why' of Twitter,” she said.
She likes the simple access to a news feed, and marvels at the ability to target large groups of people with something specific. However, she said communicating ideas about sustainability, fiduciary duty, the markets and good works in 140 characters is a major challenge.
“I haven't got any specific business from using Twitter yet, but as I get better at it and understand the etiquette, I think I will,” she said.
Whether her colleagues at MSSB, and in the wirehouse world more broadly, take up the social-media challenge remains to be seen. Technology consultants in the industry say that early enthusiasm for it among some advisers has begun to wane. With social-media, however, people have to stick with it to see benefits.
“People's attention spans are short,” Ms. DeBellis said. “The second you walk away from it, you can lose the work you've put into it. It's a dedication.”
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“LinkedIn is here to stay. In fact, I think it's critical to have a business presence on it.”
— Fay DeBellis
