by Bill Winterberg, CFP®
Bill Winterberg, CFP®, is a technology consultant to financial advisers in Dallas, Texas. His comments on technology and financial planning can be viewed on his blog at www.fppad.com.
The rapid advent of social media and social networking is disrupting the way financial planners market their practices and communicate with clients and prospects. Popular Web sites such as Facebook, LinkedIn, and Twitter provide compelling and previously unimaginable ways to communicate with family, friends, allied professionals, clients, and prospects. But with this rapidly growing medium comes significant uncertainty about how planners can leverage social media to meet business objectives and do so without violating regulatory or compliance requirements. In my debut Practices column, I'll explore several methods by which financial planning firms can measure the efficacy of their social media profile while maintaining compliance with regulatory requirements.
Ground Rules
Before I dive into the tools and technology used to maximize the social media experience, I'd like to set a few ground rules. If you want to pursue the use of social media to enhance your firm's brand and profile on the Internet, you must first agree that your firm has:
- No significant obstacles to growth. This means that you have adequate staff to serve existing clients and new prospects, your processes and procedures are well defined and streamlined to maximize efficiency, and your portfolio accounting, CRM, document management, and financial planning systems integrate fairly well without being a burden to you or your staff.
- A formal marketing plan containing specific goals and objectives, assignment of responsibilities, implementation strategies, and techniques to measure the results of the plan.
- Approval from either your chief compliance officer or your
broker-dealer's compliance department to proceed with the use of
social media technologies.
If your firm currently struggles with limited service capacity, disjointed systems, or no clear marketing goals, your time is better spent addressing those opportunities rather than engaging in a social media strategy.
Managing Multiple Profiles
There is no question that interest in social media Web sites
such as Facebook and Twitter is exploding. According to The Nielsen
Company, global time spent on such sites increased 82 percent from
December 2008 to December 2009.1 There are hundreds of
social media Web sites competing for the attention of billions of
users, but three top sites of interest for financial planners are
(in no particular order) Facebook, LinkedIn, and Twitter. These
sites allow financial planning firms to post status updates that
can include anything from information on upcoming events, to
feature articles in magazines, to important tax-related reminders
for clients.
However, creating and maintaining a company profile on these sites
poses the problem of synchronizing status updates across all three.
One solution to this problem is to use a service from Ping.fm (http://ping.fm/).
Ping.fm is a free service that posts status update messages to over
40 supported social media sites, including the three mentioned in
this column. Rather than visiting each site to post an update,
Ping.fm consolidates the update process by providing one site to
enter an update. The update is broadcast to any social media site
configured in Ping.fm's system (configuration is done by entering
Facebook, Twitter, and LinkedIn login credentials on the Ping.fm
service). Another free consolidating service for status updates is
available from FriendFeed (http://www.friendfeed.com/).
Monitoring Activity and Interest
Using status updates to post information about your firm, recent
media features, or awards you have received is an excellent way to
establish a respected social media profile. The number of friends,
followers, and connections to your profile should grow consistently
over time. A high following is a good baseline measurement, but how
do you know whether anybody is actually reading what you
post?
One technique to monitor interest in the content you post is
through the use of URL shortening services such at Bit.ly (http://bit.ly/) and Ow.ly
(http://ow.ly/). These
URL shortening services serve two purposes. First, they shorten
long Web addresses down to compact URLs suitable for short status
update messages (for example, messages posted to Twitter can be no
longer than 140 characters). Second, they provide tracking
capabilities on shortened addresses, including metrics such as how
many times a link is clicked and which Web sites generate the most
referrals using the link.
Rather than post the full address of an article located on your Web
site, you create a shortened URL that you post to your social media
profile pages. Periodically, you can examine the statistics of the
URL click-throughs and see how many people are clicking the link to
view your content. While URL shortening services are good at
showing how many clicks are made on a particular link, they do not
show what the Web site users do once they are directed to the
linked Web site.
Monitoring Web Site Traffic
Ideally, the majority of your firm's social media updates should
direct users to your firm's Web site where the item of interest is
posted. The purpose is to leverage your existing Web site as the
central hub of communications related to all of the firm's
activities.
Web site activity can be monitored through Web analytics services
such as Google Analytics (http://analytics.google.com) and Woopra (http://www.woopra.com/). These are free
analytics services that are used to provide metrics on not only the
number of visits to a Web site, but also which Web site pages
receive the most traffic, how much time users spend browsing pages
on the Web site, and which search keywords are used to enter the
Web site. If your Web site is hosted by one of the vendors
specializing in Web pages for financial planning firms, ask for
information about available analytics reports.
With Web analytics reports in hand, you can monitor the following
data points to help determine whether your social media profile is
increasing activity on your firm's Web site. These data points are
ranked in order of my personal preference, beginning with the most
important.
- Top Web site content: Top content information reveals which pages on the firm's Web site are the most popular with visitors. Are visitors reading bios on firm principals and employees? Are they reading research articles? Also of significant value is identifying what visitors aren't reading. Perhaps your firm posted a series of updates on 2010 estate planning strategies, but very few visitors actually visit the pages. In response, the firm may take action to make links to the articles more prominent on its home page to attract traffic. Conversely, it may reveal that visitors aren't interested in estate planning information, so the firm can focus its efforts on other areas of financial planning that attract more interest.
- Referring Web sites: Referring Web site information identifies which Web sites are driving the most traffic to the firm's Web site. Here, you can determine how many times visitors click on links to your firm's Web site on sites such as Facebook, Twitter, and LinkedIn. If your firm manages profiles on all three social networks, referring Web site data reveal which site provides the most exposure and interest for firm updates. This data can be used to focus a social media strategy to maximize the development of the firm's brand and public profile.
- Average user time viewing content: When visitors come to your firm's Web site, how much time do they actually spend reading content? This data point identifies whether your Web site has sufficient content that is compelling and engaging to the average visitor. Certainly there will be visitors who make short visits to grab the office address or a phone number, but on the whole, capturing visitor attention information helps you determine the overall level of interest in your Web site's content. One secret: Web sites with embedded video have much longer average viewing times than Web sites with only written updates.
- Total number of unique visitors and page views: These data points are straightforward: how many individuals visited the firm's Web site over a specific period and how many pages did they visit? Page view information shows how many pages of content are viewed during each user's visit to your Web site. Again, if your Web site features compelling content, average page views should be in the range of three per visit and higher. Google Analytics also provides the ability to compare the number of visitors and page views during two time periods, helpful in gauging month-to-month percentage changes in Web site activity.
Social Media Compliance
One of the most frequently cited reasons that financial planners
don't participate in social media is uncertainty regarding
compliance. Can investment advisers and registered representatives
even use social media? If so, what are the rules on what advisers
can and cannot say in status updates?
In late January, FINRA released Notice 10-06,2 providing
guidance to registered representatives and chief compliance
officers on the use of social media Web sites. At the time of this
column's submission, the SEC had not issued any of its own such
guidelines.
The two main objectives of FINRA guidelines are to protect
investors from false or misleading claims and representations and
require firms to establish appropriate supervision over
representatives' social media use. I'll address only the latter
objective in the remainder of this column with an emphasis on the
ways technology can be used to satisfy social media monitoring and
supervision.
All social media messages posted by members of your firm must be
retained in your compliance file as required by Rules 17a-3 and
17a-4 of the Securities Exchange Act of 1934 and also NASD Rule
3110. There are three main ways this can be accomplished.
- RSS feeds: Many social media Web sites provide RSS feeds for all messages submitted by users. The specifics of how RSS works are beyond the scope of this column, but the general purpose of RSS is to allow Internet users to subscribe to specific content on Web sites (referred to as "feeds") and receive it with RSS-compatible software. One free service called Feed My Inbox (http://www.feedmyinbox.com/) will convert RSS feeds into e-mail messages. Therefore, your firm can configure the Feed My Inbox service to convert the RSS feeds from social media Web sites to an e-mail that is sent to a special e-mail address created just for compliance. Then, your firm can leverage its e-mail archiving system to capture all social media messages in addition to regular e-mail.
- Third-party applications: Many social media users want the ability to save messages posted on sites such as Facebook, Twitter, and LinkedIn. To satisfy this need, third-party application developers created software that captures and archives these messages. Archiving applications include services from Backupify (http://www.backupify.com, free basic and paid premium plans available), Smarsh (www.smarsh.com, contact company for pricing), and Arkovi Backups (www.arkovibackups.com, free and paid plans available). Compliance officers will want to evaluate the costs and benefits of each application provider to determine whether the services meet the needs of your firm. It is unlikely that FINRA will ever provide any guidance or pre-qualification for any of these tools regarding whether or not they satisfy compliance requirements.
- Enterprise system: An enterprise system supports more sophisticated features in addition to message capture. For example, Socialware (http://www.socialware.com/) offers a software product called Risk Manager that enforces social media access restrictions based on user-level permissions, quarantines message that may violate company policies, and routes messages for review and approval prior to their public posting. Facetime (www.facetime.com) manufactures a hardware product called the Unified Security Gateway that connects to your network equipment to monitor and screen potentially non-compliant material sent over your Internet gateway. These enterprise systems offer an integrated solution to define, implement, and monitor your company's policy on social media supervision.
If your firm is considering testing the waters with social media, you now have additional resources at your disposal to evaluate the return on your investment while maintaining compliance with supervision requirements. Your firm can embrace these rapidly growing communication media instead of ignoring social media as the latest Internet fad. With the right tools and objectives, you can enhance your firm's profile and visibility to ultimately attract and retain clients through your social media efforts.
Endnotes
- The Nielsen Company. 2010. "Led by Facebook, Twitter, Global Time Spent on Social Media Sites up 82% Year over Year." Nielsen Wire (January 22): http://blog.nielsen.com/nielsenwire/global/led-by-facebook-twitter-global-time-spent-on-social-media-sites-up-82-year-over-year.
- 2010. "FINRA Issues Guidance to Firms, Brokers on Communications with Public Through Social Networking Web Sites." (January 25): www.finra.org/Newsroom/NewsReleases/2010/P120780.
