Relationships are essential for business enterprises—relationships with customers, relationships with vendors, relationships with employees. I can’t think of a single business that could function, let alone thrive, without relationships. Even go-it-alone entrepreneurs don’t really operate in a void of relationships. For investment advisers, relationships are the lifeline of their businesses, essential for building and sustaining their firms and key to increasing business.
Investment advisers acquire new clients through referrals; that is the No. 1 way they have built their businesses for years, and it continues to be the most successful method. Referrals come through a variety of methods ranging from receiving a passive recommendation from a happy client to purposefully asking clients for referrals.
What is changing is the way those referrals are attained. Welcome to the ever-evolving and rapidly expanding world of social networks.
I am an avid Facebook user. I often find I know more about what is going on with a friend who lives 1,000 miles away than I know about my next-door neighbor. Social networks are helping us bridge that 1,000-mile span better than the short, across-the-fence distance. In more and more relationships, social networks are becoming our preferred communication and stay-in-touch method.
For the investment adviser, that would certainly indicate social media is being used by your target market. Let’s look at the numbers. In the market segment of age 55 and older, more than 27.4 million individuals have indicated they use social networking, according to comScore. Even more staggering, the majority of social network users are individuals over 35 years old, according to data from Google Ad Planner reported by www.pingdom.com. For many advisers, professionals 35 years old and older represent their target demographic. Instead of social networking, think social marketing.
Social media is on fire when it comes to client acquisition. Advisory firms using social media are growing faster than their counterparts not using social media—three times faster in terms of annual revenue, AUM and client base, according to Aite Group. What is driving this growth? Social network referrals. If you’re not using social media, read on! Using social networks to generate more referrals is easier than you might imagine. Here’s a primer on a little social etiquette to keep in mind as you join the social networks.
Attire for the Party
Take time to set up your profile on Facebook, LinkedIn, etc., and be sure to reference your firm’s social media policy. Finra has backed away from its stance to require broker-dealers to file social media postings, making these communications potentially less daunting for all involved.
Scope Out the Scene
Search for existing clients on social media platforms and extend invitations for them to join your social network to connect with you. Also, check out Google alerts and apps such as Flipboard, which allow you to set up filters on specific companies and individuals (yours, your competitors, your prospects and your clients). This provides great efficiency in that you are sent only those items on the companies and individuals you have selected to follow.
Connect and Mingle
After clients accept your invitations to connect, you then have the ability to review their connections. In doing so, you will be able to quickly see and determine those individuals you would like to meet via an introduction by your clients.
Knowing your clients’ connections allows you to be very specific when you ask for a referral. For example, you could say, “I noticed on LinkedIn that you are connected to John Smith. I have been trying to figure out a way to introduce John to our services. Would you be willing to introduce me to John?”
The difference? It is no longer a generic request of, “Can you provide me with any referrals?” It is a targeted request that does not leave to chance whether the potential prospect is a fit for you and your firm.
Deliver With Intent
After you make the decision to join social networks, make the commitment to stay involved. It’s a business opportunity you shouldn’t ignore. Here’s why: two out of three firms say they have a social media policy, however, 83 percent of those firms do not even maintain a corporate social networking site, according to a 2011 survey conducted by ACA Compliance Group. In other words, the social media policy is most likely to not participate in social marketing at all. Therein lies the true opportunity.
As you take steps to move into using social media you will find that asking for specific referrals becomes much easier, and your potential for growth will be rapid. In addition, it will allow you to communicate with clients in a format they are most likely participating in already. Welcome to the party!
Eric Clarke is president of Orion Advisor Services LLC. He currently serves as the task force chair for FPA Business Solutions 2012. Join him and many other industry-leading practice management experts in San Francisco March 4–6, or follow the conference action on Twitter using #FPABSC.
Want to discuss these issues with colleagues or pose questions to the author? Visit the Social Media Marketing community at FPA Connect to take part in the conversation.
Bill Winterberg on Social Media Compliance
In this one-minute video clip, technology consultant and Journal of Financial Planning columnist, Bill Winterberg, CFP®, offers advice to financial planners on social media compliance. www.YouTube.com/FPAtelevision
Top 5 Tips for LinkedIn Newbies
Kristen Luke, CEO and president of Wealth Management Marketing, offers five tips for financial planners who are just starting to use LinkedIn in this short video clip.