Social Media Expert Q&A

By John Drachman, Financial Writer

Still another social media study offers proof that advisors, investors, and institutions are increasing their social media participation.

Study: Advisors turn to social media in greater numbers

According to a 2011 survey by American Century Investments, 71% of advisors had a personal or business Facebook profile and 55% are now on LinkedIn.

It’s the RIA world though that’s embracing social media the most.

MSNBC reports that Cambridge Investment Research unleashed the power of social networking to its advisors last year. This month saw Commonwealth Financial Network opening up the RSS feeds and everything else to its advisors.

There’s different media for different folks: Facebook way be right for close followers and customers, while LinkedIn can be ideal for networking with centers of influence. Many advisors are finding that tweeting highlights from a conference event to their followers act as on-the-spot reports to followers who couldn’t make the conference themselves.

One of the reasons for celebration has been FINRA, which has been as supportive of social media as it has been clear in its directives. Advisolocity’s Zach Hedges said recently, “FINRA likes the idea that asset managers are providing more information to investors. Having a written social media policy helps, too.”

His statement was borne out following the triple whammy in Japan — earthquake, tsunami and nuclear meltdown. Gaxiola Financial scored high marks from the press and public with their posted messages on Twitter and Facebook that investor exposure to Japan in client portfolios was minimal.

Social media is a two-way street, too. Investors can window shop and look around for the best advisor for their particular situation.

John Drachman can be reached at john@advisolocity.com

New Clients? First, Form ADV Part 2

“Closed to new clients. Please take your business elsewhere.”

In effect, that is a sign many RIAs will put on the door if they fail to file their new Form ADV Part 2 A brochures by March 31.

The advisors most affected are those with fiscal years ending 12/31/11. Those advisors have until 5/31/11 to make the piece available to current clients.

“Whenever possible, I’ve directed advisors to resources and experts in the DBJ Associates (DBJ) network,” said Bruce Johnston recently. Founder and president of DBJ, Bruce blogs on the Form ADV Part 2 subject at RIA Marketplace http://tinyurl.com/4kpvs2u .

“The pressure is on. Many advisors just haven’t focused on this – especially since its tax season,” he continued. “That’s why I’ve assembled a team of plain language writers to help meet increasing demand as the deadline draws closer.”

Called the “Form ADV Part 2 Survival Kit,” the service will offer content delivery for both the new ADV Part 2A and 2B. “The new Form ADV  Part 2 is really different from the old ADV Part II,” Bruce added, “and a lot of professionals, who are do-it-yourselfers, are finding that they can’t do this for themselves.”

For $2500, the Survival Kit will provide advisors with the complete electronic filings they need to stay compliant. “After a brief discovery conversation and document request, we go right to a first plain English draft,” he said. “We anticipate turnaround times of between three and five days.”

Advisors in a hurry can contact DBJ Associates at 405.381.9390 or by sending an email to bruce@dbjassociates.com

With an open mind, a sense of experimentation, and a relatively small budget when compared to traditional marketing, smaller firms are finding themselves rewarded by fresh attention to their ideas and products through social media initiatives.

New strategies link small businesses to clients

For managers between $25 million and $1 billion in assets under management (AUM), social media marketing and networking offers the prospect of heightened media bandwidth for a lower cost than more traditional advertising programs.

The University of Maryland’s Smith School of Business looked at the relationship between social media and small businesses and found that the technology adoption rates in the U.S. have doubled in the past year from 12% to 24%.

Small is still beautiful

The data, undertaken by the University, is based on a December 2009 telephone survey of 500 small business owners. Adoption rate calculations are compared against a baseline report conducted in December 2008.

The study concludes that nearly one in five small business owners are integrating social media into their business processes — Facebook and LinkedIn were the most popular sites. In fact, 45% of surveyed respondents even believe their social media initiatives will pay off financially in 12 months or less.

Deploy more with less

If you have a small financial services firm, perhaps you have made decisions about adjusting your staffing and business model to the challenges of the current environment. Social media programs provide a way to deploy more resources and effort toward your distribution and marketing efforts without heavy additional costs

Even in uncertain recovery, many smaller businesses like yours are committed to expanding their presence, yet have little appetite for going back to business as usual.

The pattern that characterized the emergence from similar market environments in the past is not being repeated. The cycle of downsizing and staffing up has been altered as executives look to more efficient ways to motivate purchasing behavior through new combinations of technology and communications.

This article is a summary of an excerpt from “An Introduction to Social Media: A Guide for Smaller Money Managers.” Authored by R. Jeffrey Young, Huntington Asset Service, and D. Bruce Johnston, Advisolocity, downloadable copies of this report are available at http://www.advisolocity.com/huntington/

Will money managers soon be showing their customers more love?

According to D. Bruce Johnston, due to pressures from outside the industry, most notably from banks, the answer is a resounding “yes.”

Loud and clear: customers want attention

“As the customer service benchmark is being raised outside of the industry, money managers too will find themselves held to a higher standard by investors and advisors,” added the president of DBJ Associates.

Banks have raised customer service bar

Johnston sees part of the pressure coming from the rise of mobile technology, especially  iPads, which “are conditioning people to expect instant access to information 24/7.”

According to Johnston, such initiatives are not unknown in investment distribution. “It’s something asset managers have been trying to teach through value-add programs — to be more sensitive to the clients’ needs,” he said in a recent Hannah Glover article for Ignites. “It’s time for asset managers to apply the same standards to both advisors and investors,” he added.

Johnston, co-author of Introduction to Social Media with R. Jeffrey Young of Huntington Asset Services, added that “As firms study and adapt to the new world of enhanced customer service, they should not overlook creative and cost-efficient solutions that are close at hand.”

Johnston concluded that social media blogs and networks offer financial marketers a convenient and inexpensive way to provide more service-oriented communications to customers.