Why social media is too important to ignore

Many insurance companies, if they are engaging in social media to benefit the business, have a compliance person and/or legal person on the team who is charged with reviewing all social media posts and discussions, which can prove on the one hand necessary and on the other, the bane of an agent's social media existence.

"They've helped in mitigating the risk and making the initiative work," said Fontano. "They've been very helpful in assisting us to build a social media solution. It's taken longer up-front, but in the long run, we feel more comfortable with the product we have."

On the other hand, compliance can be a roadblock to timely communication with prospects and clients. "Because of potential delays to get social media messages compliance-approved, some advisors just won't do it," he added.

Social media concierge

Some insurance and financial firms are handing over social media policing, content strategy and other responsibilities to businesses that handle just that. One such company is Hearsay Social, a San Francisco-based social media marketing management platform. Basically, it's software that allows those familiar with and those new to the social media game to easily adopt social business techniques to attract prospects, retain customers and deepen relationships. 

Insurance agents and financial advisors have long understood the need to be social as a part of their sales process: The best agents have always been those who build strong relationships with customers, inform prospective customers, keep in touch, and ask for referrals. Hearsay works with insurance companies to translate these best practices to a new way of engaging and communicating through social media.

"It complements what they are already doing in the real world by giving them a presence and building their personal brand and credibility online," said Gary Liu, vice president of marketing at Hearsay Social. For example, through a library of content that can be published or scheduled, agents can easily establish their credibility on the Web while growing a network of clients and prospects with whom they can engage at scale. And through the platform's "Social Signals," which are alerts an agent receives whenever an important life event occurs with someone in your network — like the birth of a baby or a new job — agents can now know the best time to reach out to people with the right message.

Say a connection on Facebook just announced his family recently purchased a new home. Maybe it's time to reach out to that old high school buddy and let him know about the importance of life insurance. Hearsay helps separate the "noise" from the events that could lead to a sale. And it seems to be working.

According to Liu, one of Hearsay's customers, a Fortune 500 financial services organization, found that the platform helped drive a 22 percent increase in sales, compared against a control group. And at another major insurance company, one insurance agent reported that 62 percent of his business in one year came directly through using Hearsay Social to manage his Facebook presence.

Another player in the social media management game is Socialware, an Austin-based competitor to Hearsay. Bruce Milne, Socialware's CMO, says every firm has a different tolerance level for risk and different rules for various groups within the firm; however, "All are looking for a reliable and comprehensive way to permit social media engagement, maintain compliance, and equip advisors with the skills to use social media as a business channel."

Milne points to the overlooked fact that the fastest growing demographic group on social media is late boomers, who are — coincidentally — the largest target market for financial firms. This segment values financial education that they receive through social media and typically are not connected to a financial advisor yet. "This represents a large opportunity for firms who are first to the gate to engage directly with consumers through their advisors, before their competition does," he said.

At the same time, 40 percent or more of young adults will be financially unprepared for retirement due to a lack of financial education, according to the SEC. "Increasingly, Gen X and Gen Y turn to online sources to research high-consideration products before they purchase," said Milne. This segment has also come to place a lot of trust on peer reviews and non-corporate online information sources for buying decisions — more so than the trust they put in traditional advertising. Social media combines the aspects of what this demographic wants, and "a skilled advisor can use it to manage relationships in a way that mirrors what they do in the physical world, but at a much higher volume," Milne added.

There is a huge opportunity that the insurance industry has to leverage social media and digital technology to modernize the classic distribution model to enable their agents to attract new customers, retain existing customers, deepen relationships and grow business at scale. Avoiding digital business means losing out on business. As more and more and more consumers turn to the Web for education and advice, will your firm be the one they see?