Social media has surged in popularity in the past year. More than 43% of those who use the Internet now use social networking sites, such as Facebook, MySpace, and LinkedIn, according to the Consumer Internet Barometer, a report produced by the Conference Board and TNS, a global market research firm. That's an increase of 27% from a year ago. In fact, online networks are so popular that The Global Language Monitor named "Twitter" as the most used word in 2009. Advisors are beginning to become more aware of the advantages of using social networking sites to keep in touch with current clients and reach out to new clients. In a survey that Rydex AdvisorBenchmarking conducted in December 2009, we found that advisors are most interested in learning how to harness social networking platforms for securing new clients (46%), enhancing communication with current clients (35%), and advertising or promoting their firms (30%)–see Chart 1 below.
While Facebook is the most popular social networking site and is considered by many to be a must-have Internet address book, the leading social networking site for advisors is LinkedIn. Seventy-eight percent of online households use Facebook, and 17% of households use LinkedIn. Among advisors, about half (42%) use LinkedIn, in large part because it is tailored for business use.
The Power of LinkedIn
LinkedIn–as well as other social networking sites–can be a powerful marketing and communications tool for advisors. "LinkedIn allowed us to expand our circle and connect with people. This social media Web site not only offers a way to reach out to others but also allows us to initiate trust and develop relationships through meeting a person on a level he or she is most comfortable," says Robert Fuest, COO and head of investment research at Landor & Fuest in New York.
Building a network is the most important part of LinkedIn. While the site provides new ways for advisors to connect with, inform, and interact with customers, compliance issues are still being ironed out for these emerging technologies, particularly for those in the broker/dealer world. In January 2010, FINRA instituted new regulatory changes and released guidelines for financial advisors who use social networking sites and blogs. As you consider using social media, it's important to become familiar with these evolving regulations.
Getting Started on LinkedIn
Using LinkedIn is still a learning process for some financial advisors. Here are some tips for advisors who would like a head start establishing their LinkedIn presence:
1. Complete your profile with as much detail as possible, including your credentials, background, affiliations, and services. If possible, add a professional photograph (preferably not from Sears).
2. Preview prospective clients' profiles-you can learn about their interests and activities, and have a more productive conversation when you meet them.
3. Join your colleagues-such as the RIA Marketplace group. For best results, actively participate in the group's conversations.
4. Explore adding clients' connections and searching for people with whom you have lost touch. By viewing the contacts of your contacts, you may be able to build referrals.
5. Make sure you have a unified marketing plan–and message–for all social networking platforms.
