New survey says more advisors building business through social media

Targeted for FINRA’s most recent sweep?
November 3, 2016
System failure? System backup!
November 17, 2016

It’s only been three years since Putnam Advisors first surveyed financial advisors on their social media usage. My how the world has changed.

Today, 31% more advisors say they are attracting new clients via social media. That’s an increase from 49% in 2013 to 80% in 2016. So…the survey suggests, “the question is no longer whether social media can function within the confines of closely regulated communications and transactions, but rather how social networking strategies work best in tandem with traditional methods to optimize advisor reach, influence clients, and cultivate a successful practice.”

Among the key takeaways highlighted in the Putnam Advisors survey:

  • Social media is no longer controversial;
  • Social media use continues to grow and is increasingly sophisticated; and
  • Compliance frameworks are in place and “generally accommodative.”

Younger advisors are…more social

While business usage of social media by advisors 65 and older remains a stable 60% (!), younger advisors, particularly those in the growth stage of their careers are “heavy and successful users of social media (85%).” Most use social media tools and strategies for marketing (82% of advisors managing $100M+ say social media was instrumental in gaining new clients for a $4.7M media asset gain).

LinkedIn use is up, but not as much as other communications conduits like Twitter and Facebook. Advisors surveyed say they use LinkedIn primarily to connect with peers. They rely on Facebook to build brands, strengthen referral networks, and for prospect cultivation. Twitter delivers the same results, with the added benefit of its use to enhance client relationships.

Compliance is more socially adept too

According to the Putnam Advisors 2016 survey, 81% of advisors are aware their firms have social media policies and they say they understand the specifics of those policies. That doesn’t, however, mean that advisors and compliance professionals always see eye to eye. Rather, many of the advisors surveyed complain that their firms’ restrict their ability to mention corporate affiliations and typically limit their “professional” social media activity to “personal use.”

Compliance professionals, of course, worry about regulatory exposure. Social media, like other digital communications tools (like texting), typically is covered under established electronic communications regulatory compliance policies. Good news is that compliance professionals have “socially adept” oversight tools at their disposal too. These include cloud-based electronic communications systems and “sophistication of middleware and surveillance software” to help manage social media risk and ensure regulatory compliance.

These tools make it possible for chief compliance officers and others responsible for regulatory oversight to keep up. And when new digital outlets and tools, many as yet unimagined, come online systems to support compliance oversight will come online too.

Buried but unbowed?

It’s a given that management, supervisors, and every compliance professional is responsible for tracking communication in this increasingly digital world. Be smart. Go digital. Follow your members and archive their communications effectively. Have the right written supervisory policies procedures in place. Make sure everyone knows they exist. Track, review, manage and archive all your electronic communications in a manner that is easily accessible.

Stuff happens. And when it does, make sure you have the tools to ensure regulatory compliance, reduce your firm’s reputational exposure, and avoid related financial consequences. Even if your compliance function is under pressure to do more with less, you do have options!

Let’s talk (212-233-1155). Ask about Patrina’s comprehensive compliance solutions, compliant data capture + storage, and compliant recordkeeping specifically designed for the financial services community.

Let’s talk.

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