Social Media for RIAs
Part I of III in a comprehensive analysis series
The topic of social media use by the registered investment advisory community, including the how, where, why and when, merits a pretty thorough discussion; and it is one which we have been really excited to share with the community. Because of the complexity of the topic, one can easily be overwhelmed by the entirety of the discussion.
This Discussion Applies To…
So, for ease of reading, I’m going to break this discussion into several articles and proceed under the following assumptions:
- Your firm possesses significant intellectual capital it wishes to share with its client base
- Your firm is seeking an additional outlet for its marketing efforts
- Your firm is trying to grow its assets under management
- Your firm is looking for another way to engage its clients, prospects, and other contacts
- Your firm is concerned with the regulatory implications of social media use
If the above assumptions accurately describe your firm, then we believe you will find this series of discussions highly applicable. If you would prefer to watch the slidecast, the video is located below.
“Social Media and RIAs: A Comprehensive Best Use Marketing Strategy” Slidecast Replay
Social Media Is On Fire
Unquestionably, social media has become the hottest Internet-related topic in many years. And we believe by now the number of individuals within your client base and targeted prospects using social media in some form outnumbers those not using social media. However, we find the use of social media by most service-related firms to be unremarkable. And it’s just as easy for RIAs to flounder in social media without realizing its true power. Adding further confusion to this topic is the multitude of social media marketing advocates who constantly preach various “best use” practices. However, we believe it’s a mistake to discuss social media use without evaluating the marketing platform’s potential benefits within the registered investment advisory business model framework due to your business’s unique nature. Nonetheless, discounting the uniqueness of the RIA business model for a moment, I know that I’m not using my Facebook time, the small amount I do allocate for ‘Facebooking’, to search for professional service offerings from various companies advertising or promoting their Facebook pages. I’m more likely to depend on social networking for recommendations for firms that can meet my service related needs. And I don’t think I’m in the minority with my behavior.
But Is There Any ROI?
Assuming the majority of other social media users in your target audience shares this view, the question for investment advisory firms becomes, “How do we monetize our time and efforts, drawn from a pool of finite resources, that we invest in pursuing the establishment and maintenance of a social media presence?” And based on the results of a recent survey conducted by Rydex|SGI AdvisorBenchmarking, it appears that early adapting RIAs have begun to ask that very question. Out of all marketing methods polled that were used by RIAs between 2010 and 2011, social media use suffered the greatest rate of change, declining some 32 percent! It is our opinion this decline represents the absence of broad-based social media marketing success by advisors.
So What’s the Answer?
After carefully considering the evolution and present state of social media, we believe we have the answers to the question posed above. Notice the ‘s’ tacked on at the end of ‘answer’. We believe there are a couple of high value uses of today’s social media sites, fully compliant with current SEC regulatory guidance, and are absolutely thrilled with the opportunities they present relative to the RIA business model, but perhaps not in the way many service-related firms are currently using the social media sites. It’s our opinion that many professional services firms do get drawn into committing significant resources into the maintenance of a social media presence without possessing a clearly defined objective of those efforts and even fail to establish any analytics that may help quantify the firm’s return on its investment. It’s easy to see how this can happen because there are many different ways firms can utilize social media in their businesses.
How NOT To Use Social Media
We don’t believe creating and constantly updating social media pages and profiles with the intent to drive traffic to those sites is the right way for conventional RIAs to use social media. Discounting the potential regulatory nightmare this model of use can create (which, of course, one can never do), the practice could actually backfire. Can you imagine tackling this comment from a client:
“I don’t understand how you can constantly update your Facebook page and reply to all of those status updates and comments if you’re supposed to be managing my money. I don’t even have that much time to s”pend on Facebook!
The whole idea of professional services firms ‘Facebooking’ has such an air of cheesy consumerism to it – a stereotype that Facebook is trying desperately to eliminate by offering more business related features. We believe eliminating this stereotype is going to prove to be very difficult because it may be too ingrained in the user base – after all, it’s this social element that made Facebook what it is today.
Although It May Work For Retail Branding
For those firms operating primarily in the retail space offering products to either a wide swath of the populace or specific demographics known to be heavy Facebook users, the investment can pay off. One example that immediately comes to mind is Allstate Insurance. Allstate uses its social media presence to reinforce its brand by building on its marketing campaigns while simultaneously engaging its client base by offering those individuals the opportunity to dynamically interact with the corporate entity on an immediate basis surrounding primarily social topics (most of the firm’s own content resides back on the company’s blog, which is ultimately where Facebook users get redirected to for the whole story). Allstate’s brand is targeted at a large enough market to justify the resources committed to maintaining the firm’s social presence (although it can backfire as was the case with the Rush Limbaugh Show/Allstate advertising mix-up where seemingly two-thirds of the current 600+ comments on the story have been made by those Facebook users stating publicly they will be dropping their Allstate coverage due to the company’s political entanglement).
Returning to the RIA business model, it can be distracting for your target audience (clients, leads, referral sources, allied professionals) to constantly toggle between a serious, corporate perspective surrounding the topic of professional financial management (as they attempt to consume your message) and a casual, personal perspective prevalent on most social media sites due to the nature of the majority of content present at those sites. (However, distribute the exact same content from your firm’s website, and we believe there is a greater chance the content will be consumed in its proper context.) Consequently, we have LinkedIn catering to corporate networking, Facebook monopolizing the social environment, and Google+ trying to reinvent the whole experience. Factor in the strict regulatory restrictions placed upon RIAs regarding the content they are permitted to host publicly (more on this issue in Part II), and you begin to wonder if any of this social media stuff is actually worthwhile.
Two Strategic Uses For RIAs
Well, we believe there are valid uses for social media, including Facebook, within the context of the RIA business model. Specifically, we see the greatest value offered by social media platforms to be (1) their highly targeted content distributive capabilities and (2) their social sharing functions. Imagine being able to perfectly segregate your target markets – from clients to prospects to referral sources to allied professionals – and push various media-based content, specific to each category, which always hits its target audience. This has been the holy grail of broadcast media marketing since it began and Google+ makes it possible “out of the box” with circles. Facebook is trying to mimic this functionality with groups, although it does not currently have the real time media distributive capabilities Google+ has. Twenty years ago, no one could have imagined using broadcast media and nailing one’s target market perfectly each and every time. Instead, terms like “shotgun approach” were used to describe an attempt to scatter one’s message across diverse segments of the populace in order to give that message the greatest chance at hitting someone in the defined target audience.
Media Consumption On The Go
Right about now, you may be thinking, “Well we don’t use or even have the ability to use broadcast media (because of limited technical resources, budgets, etc.) or even have a desire to use broadcast media.” And if broadcast media was limited to television consumption, then that may be a defensible position to take. However, everyone I know now walks around carrying an HD media consumptive device in a pocket or purse. Moreover, because of the ease at which these devices permit all of us to consume all forms of digital media, we are beginning to expect all service providers, not just network television broadcasters, to produce and distribute content of similar quality surrounding the topics that interest us that we can consume at our leisure. If providers can’t do that, then those companies that are able to satisfy our demands for relevant media-based content are generally placed in higher esteem.
And here is where I will pause this discussion. You can continue reading Part II where I discuss how distributed media fosters a more engaging relationship between your firm and your clients.
If you are an active social media user, please consider sharing this topic with your acquaintances who may benefit from our services.