Only about 8% of advisors are really making the most of social media, according to a recent study by the Oechsli Institute.

The report, "Social Media & Financial Advisors: Early Adopters vs. Casual Users," identifies six factors that distinguish an early adopter, that is someone who is leading the way into the social media space, from a casual user. According to the study, early adopters use social media daily, gather information on clients, research prospects, uncover business opportunities, receive an introduction or referral through social media, and finally, acquire new business.

"Social media used properly, as early adopters have demonstrated, is a tool," the study stated. "It is apparent that more advisors are fully capable of uncovering business opportunities, getting personal introductions, acquiring new business, expanding referral alliance connections and strengthening their client relationships with the help of social media," according to the study.  

Clearly, there are some roadblocks, compliance issues in particular, that get in the way of an advisor's social media presence. Not only do advisors have to deal with regulatory agencies, but they also must also contend with different rules depending on which firm employs them.   

"Advisors aren't sure what they can do and don't want to take the time to figure it out so they don't do much of anything," Kevin Nichols, director of social media at the Greensboro, N.C.-based institute, said.

In his work with advisors, Nichols has found that many can step up their social media game regardless of their firm's comfort level. At companies where they only allow a personal account, for example, he encourages advisors to make a LinkedIn account for the professional organizations that they are involved in or represent themselves very generically as a financial professional. Even if advisors are not making business-related posts, they can build a personable brand and, perhaps more importantly, they can listen and research their clients.

"The key is that social media is not a sales tool; it's a research tool," Nichols said. "If you're my client and I know where you went to school or organizations you're involved with, I can understand you better, and I can engage you in better conversation, which is going to accelerate that rapport."

It's always important to remember, however, that in the end, the face-to-face meeting is still the most important and that is the ultimate goal of online endeavors. Once advisors notice a connection between a client and another wealthy prospect on LinkedIn, for example, they can approach the client for a personal introduction.

"It's a research tool, but in order to get the benefit, you have to get face to face: 'Oh, I noticed you're connected to Matt [for example]. I would love the opportunity to meet him. Would you be comfortable introducing me?'" Nichols said.

The study also offers a couple caveats to advisors who are looking to bolster their presence. One trap that Nichols sees advisors fall into is that they sometimes get LinkedIn recommendations pertaining to their work as a financial advisor, which violates FINRA's rules against advertising. Nichols points out that advisors should ask for references on other work not related to their advisor business.

Nichols also cautions against making too many friends with other advisors. "I see advisors connect with too many other advisors," he said. "They're looking at your connections. They're seeing who you know and see what good pieces you're posting."

No matter the extent to which you are able to build your brand, it's important to at least develop a level of comfort and familiarity because these services will inevitably become a part of doing business.  "There are so many pilot programs," Nichols said. "It's just a matter of time before they open up the floodgates and say: 'OK you guys can start using social media.'"


Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access