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New Facebook friend request? It's your client

NAPLES, Fla. — Advisors becoming friends with clients on Facebook? Planners texting portfolio updates to worried clients late night?

Firms have restrictions on advisors' social media use, but clients are amenable to the idea of connecting digitally with their advisors — and it may soon become a business imperative.

Eighty-nine percent of millennials and 59% of Gen Xers say they are open to their advisor following them on social media platforms, according to a new survey by Broadridge Financial Solutions. Facebook was the preferred social media network for 61% of millennials and 38% of Gen Xers. Only 19% of baby boomers said the same thing.

The login page for the Facebook Inc. social media site, is seen on an Apple Inc. iPhone 4 smartphone in this arranged photograph in London, U.K., on Wednesday, Aug. 29, 2012. Facebook Inc. is teaming up with architect Frank Gehry to expand its headquarters in Menlo Park, California with the project set to begin in spring 2013. Photographer: Chris Ratcliffe/Bloomberg
The login page for the Facebook Inc. social media site, is seen on an Apple Inc. iPhone 4 smartphone in this arranged photograph in London, U.K., on Wednesday, Aug. 29, 2012. Facebook Inc. is teaming up with architect Frank Gehry to expand its headquarters in Menlo Park, California with the project set to begin in spring 2013. Photographer: Chris Ratcliffe/Bloomberg

To be sure, firms have increasingly been enabling advisors to have more of a presence on social media and to engage in compliant texting. Janney Montgomery Scott, a regional broker-dealer based in Philadelphia, recently introduced compliant texting.

But the Broadridge survey suggests clients are more willing to communicate this way than the industry has permitted advisors to do. It’s also an example of how the industry needs to evolve, says Chris Perry, president of global sales at Broadridge, who pointed to how Netflix and Uber upended Blockbuster and taxis. “Technology did not kill these businesses. Not paying attention to the customer did,” says Perry, who spoke at SIFMA’s private client conference.

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Firms may still be sending traditional communications — such as quarterly account statements — but clients aren’t reading those documents in traditional formats. Thirty-eight percent of millennials reported reading advisor communications on their smartphones. By contrast, just 7% of baby boomers said the same.

Perry says those figures could easily double over time as more firms adopt dynamic texting as a normal communication practice. “Wouldn’t it be cool if you could get a text that said, ‘Hey, you haven’t made your IRA contribution yet. Here’s a link that will let you do it.’”

However, clients did not highly rate the digital advisor communications they are receiving. Less than 40% said such communications were “engaging” and less than 30% said they were “actionable.”

The survey, conducted in conjunction with market research firm Engine, polled 502 clients who currently use a financial advisor.

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