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4 ways financial advisers can build a social media strategy

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Social Media

A social media presence isn’t just nice for a wealth management firm to have, it is now vital to the business, Clara Shih, founder and CEO of Hearsay Social, a social media marketing software maker, told the audience at SIFMA’s Private Client Conference last week in New York City.

“The world has gone social and mobile,” Shih said. Ninety-eight percent of U.S. Internet users belong to a social network, with Facebook, Twitter and LinkedIn being the most important social networks for advisers, she said.

Clara Shih, founder and CEO of Hearsay Social

These tools help advisers to stay in touch with clients and keep their business top of mind. Ultimately, online signals can lead to offline conversations and a striking social media presence is as important as being listed in the Yellow Pages used to be, Shih said.

But social media is more than a marketing tool. It allows advisers to see the life events of clients that trigger financial decisions, such as getting married, having a baby or buying a home. Savvy wealth managers use the information gleaned from social networks to set up phone conversations and in-person meetings. For example, Shih mentioned how some advisers call clients to congratulation them and schedule meetings to update clients’ financial plans when advisers see birth announcements on social media.

Automated financial advice services, such as Wealthfront, Betterment and Personal Capital, have changed clients’ expectations, Shih noted. “[Clients] want an adviser who is always on,” she said. Face-to-face meetings combined with social media can give wealth management firms an edge when competing against these robo-advisers.

Shih offers four steps for wealth managers to hone a social media strategy:

  • Be findable. Develop a social media presence on Facebook, LinkedIn and Twitter so clients and prospects know your firm exists.
  • Grow your network. Social media allows users to foster more connections, which can eventually turn into new clients.
  • Use social media to research clients and their needs. Social networks provide an incredible amount of detail about clients’ goals and priorities.
  • Create content on social networks to establish credibility. Unlike television, where advertising is viewed as an interruption, well-crafted content marketing is welcomed by social media users, Shih said.

With wealth management firms face staffing shortages as baby boomer advisers retire, a robust social media presence can be a strong recruiting tool. Why? Because it connects with prospective recruits where they are spending their time, Shih said.

Social media is not without its challenges. Social media websites can generate a lot of noise that is not productive for business. The time it takes to navigate social media can be overwhelming for advisers unfamiliar with the technology. And regulators are scrutinizing the social media activity of wealth management firms.

Shih offers some advice to overcome these challenges: Make it as simple as possible for everyone in the firm, from advisers to the compliance department, to use social media. Have a well-developed social media policy so advisers aren’t using social media for business purposes outside of the firm, and provide technologies that protect advisers from the cyberattacks. Social media also  should be integrated into the entire business and not solely run by the compliance department. It helps when the leadership of the firm is deeply involved in social media, demonstrating how it can grow the business, Shih said.