Social Media Challenges Financial Advisors Must Face – and How To Overcome Them

Social media. As a marketing and lead generation tool, it’s unsurpassed in its speed, cost effectiveness, and ability to produce results – but utilizing it does come with challenges, particularly for financial advisors.

In January 2018, Hootsuite reported that half of the world’s population – 3.2 billion people – is active on social media, and that almost all of them access social media sites from mobile devices. More people than ever before are connected to at least one social platform, and they are accessing it daily.

What does this mean for our businesses? It tells us that social media has become pervasive and permanent, and is a necessary part of brand building, lead generation, and connecting with clients. In fact, more than 81% of financial advisors use social media for business purposes – and 79% of them have reported that they have acquired new clients because of it. The average annual asset gain associated with these clients is $4.6 million.

In addition to client acquisition, social media helps us establish ourselves as thought leaders, build brand awareness, stay top-of-mind, and learn what our clients are thinking. Simply put, social media is the Swiss Army Knife of the marketing toolkit: versatile, useful, and indispensible. But like a pocketknife, if used improperly, it can cause harm.

Financial advisors have some specific concerns when it comes to utilizing social media. There are industry regulations and limitations on the types of messages and content that can be shared. Many advisors’ firms require their social media posting to be generic and non-specific, and others insist that content be pre-approved by their compliance departments. Additionally, there are time management and image-related concerns to consider.

Let’s examine some of these challenges and ways to overcome them:

Regulatory Restrictions

Financial advisors are governed by the Financial Industry Regulatory Authority, or FINRA, which oversees all aspects of advisor-to-public communications, including social media. There are strict rules to follow when choosing what to say, keeping records of what is said, ensuring supervision, and maintaining suitability. The best course of action to combat this challenge is to thoroughly review FINRA policy by visiting the “Social Media and Digital Communications” section of the FINRA website, and reading current regulatory notices, which are issued periodically to address questions, communicate updates, and clarify changes to policy. Included here are phone numbers and email addresses to contact FINRA experts with questions. As a general rule, it’s better to clarify permission first, than ask for forgiveness afterwards…which leads to a second challenge:

Knowing Company Policies

In addition to industry regulations moderating communications on social media, the vast majority of firms have written social media policies – and because the social media arena is constantly evolving, these rules change over time. Many firms even identify which social media platforms are permitted, and which are not. Taking advantage of workshops and company trainings, calling the Compliance Department, and consulting internal intranet resources are great ways to overcome the challenge of knowing what’s allowed. It’s critical to be educated on the topic, and stay abreast of changes.

Content Concerns

As established, FINRA regulations govern the nature of public-facing communications such as social media, particularly when it comes to giving advice, commenting on market trends, and pitching products. To ensure compliance, some firms only permit the sharing of pre-written, pre-approved posts from a content library, while others are more permissive. In other situations, such as linking to, or “sharing” a story, the advisor can be liable for making claims that are false or misleading. To avoid pitfalls, financial advisors should thoroughly read all content and check all links before posting.

Branding Concerns

A social media profile can be challenging in that it is a personal brand statement. This is a challenge faced by individuals in all businesses, but it can be particularly problematic for financial advisors, as the traits, activities, and interests expressed in a social media profile sometimes exclude them from connecting with clients – or worse, highlight stark differences in values and priorities between the advisor and client. To combat this, financial advisors should use the 80/20 Rule, emphasizing business-related posts eighty percent of the time and ensuring that only a small percentage of posts are personal in nature, and then by avoiding polarizing topics such as religion and politics.

Time Commitment

Curating a successful social media presence takes thoughtful attention and a good deal of time. Like all relationship building, it’s a process and it requires commitment, interaction, connection and integrity. Unfortunately, it can be difficult for financial advisors to make time for social media “chores”, with so many competing priorities in the workday.

To overcome this, there are a few strategies to consider. The first is to set goals for the number of posts or tweets in a day or week, and keep track of progress. A second is to schedule social media duties into the workday, as a dedicated block of time. Using tools within social media platforms, such as Facebook’s post scheduling feature, allows an advisor to work efficiently and plan ahead. Finally, enlisting help from an assistant or even hiring a resource to help monitor accounts (compliantly) will ensure that the lights are always on, even if the financial advisor is tending to more pressing matters.

For more information about social media and the beneficial role it can play in your business, download our white paper, “The Financial Advisor’s Guide to Social Media”.