These FAs Use Social Media for Prospecting, Engagement, Building Credibility
“As we become more and more versed in it, we’re really able to eat their lunch,” one FA says about using social media to win clients from the competition.
Social media can help advisors get in front of prospective clients, but advisors say the benefits are often less obvious than gaining new business.
It was the amateur ice hockey championship game, and the score was tied. The 13-year-old son of financial advisor Lawrence Sprung had been sent to the penalty box but came out during overtime. He skated down the rink, shot, scored and won the tournament.
To Sprung, president and founder of RIA Mitlin Financial, there was a lesson here about taking ownership of your mistakes and turning things around. He posted a video clip on LinkedIn.
The video made it all the way from Long Island, N.Y. to a hockey fan in Michigan who happened to be looking for a new advisor. That hockey fan reached out to Sprung and became a client. Another hockey fan whom Sprung had met previously but had fallen out of contact with reached out as well, and also became a client.
The idea spawned a series on YouTube, "Guess What Rink Larry Is At," and Sprung posts using other social media as well. As Sprung travels for his ice hockey games, he takes short clips of himself standing on different rinks and invites his followers to guess where he is. Mitlin donates $100 to charities chosen by selected winners.
"For me, it's much more than a prospecting tool. It's also a tool to stay engaged and stay in front of current clients," he says.
Regular posting allows clients to get to know their advisors better and keep them in conversation, advisors say. With a little luck, maybe they'll share an interesting post with their network as well, they add.
'Not a mass market strategy'
Andy Arnold, senior wealth advisor at RIA Centerline Wealth Advisors, describes posting on social media as a "hygiene item," noting it's important to have a presence.
"We have to have it. We have to do it. It makes us more visible. But it's not going to directly generate new business," Arnold says.
"Social media marketing is not about posting ads and hoping people see those and beat a path to your door. To me, it's not a mass market strategy. It's really more about building credibility," he adds.
"LinkedIn is a great advertising platform for us because we can be super targeted with our marketing," says Christina Sylvester, director of marketing at RIA Avier Wealth Advisors.
Sylvester joined Avier this year as the firm's first in-house marketing expert. Avier's clients are technology executives in the Pacific Northwest, she says. Using LinkedIn, she was able to launch a campaign aimed specifically at people who fit that profile.
Social media campaigns are crucial amid the Covid-19 pandemic, Sylvester says.
"Now that we can't meet face to face, video and social media are a way you can get to know people in a different format," she says.
Advisors have also taken to Facebook, Twitter, and Instagram. Towerpoint Wealth opened an Instagram account earlier this year in an effort to reach a younger audience, says Joe Eschleman, the RIA's president, noting that the different social networks tend to draw different demographics.
Posts on Facebook and Instagram allow the firm to show a lighter, human side, and "let people see we're not just stodgy financial nerds," Eschleman says.
Being active on multiple social networks will also improve search engine optimization, he says, ensuring that the firm will appear higher in search engine results.
Eschleman feels there is an additional competitive advantage to Towerpoint's online activity. He notes that many financial advisors are in their 50s or older, and that social media might not come as easily to that cohort. Their lack of visibility and engagement from older advisors allows younger, savvier advisors to get more attention, he says.
"As we become more and more versed in it, we're really able to eat their lunch," he says about using social media to win clients from the competition.
Regulations
In November last year, the SEC proposed updating its decades-old rules on RIA advertising. The amendments — which are still pending — are in part meant to address such milestone changes as the advent of the internet and social media, as well as clarify how advisors can use testimonials, "likes" and other endorsements, set rules on the use of performance results and address what constitutes payment for soliciting clients. Industry participants have criticized the existing rules for not keeping pace with the times.
Broadly, the SEC has proposed expanding the definition of "advertising" to cover all communication by or on behalf of an advisor offering or promoting investment advisor services or seeking to attract clients, with some exclusions such as "live oral communications that are not broadcast."
For broker-dealers, Finra's normal communications rules are still in play. Whether it be a formal newsletter or just a tweet, advisors must still archive their communications and ensure that they do not contain overly promissory or misleading information.
Advisors should similarly stay away from recommending specific products, as it could raise suitability questions, given social media's wide audience. Finra has issued several rounds of more specific guidance related to social media, available here.
"The purpose of Finra's rules is to protect investors from false or misleading content, not to stop broker-dealers of registered representatives from communication," says Amy Sochard, vice president of Finra advertising regulation.
To play it safe, advisors say they have largely eschewed finance-related posts, preferring instead to update followers on news relating to the firm or personal life events.
As Mitlin Financial's Sprung notes, there's no rule against sharing a game-winning goal.
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