The social media trend has changed the game when it comes to chatting casually about business, says James Pelmore, an investment advisor in Vancouver with Toronto-based DundeeWealth Inc.
Unlike cocktail party chat, comments posted on social media sites such as Facebook, Twitter and LinkedIn may be “overheard” by much larger numbers of people. As a result, financial advisors need to think twice before jumping into the murky waters of these sites, Pelmore says: “You are now saying things on a much larger platform, and everybody you know is listening in and associating it with you and your brand.”
Pelmore knows something about building a business. He has been in financial planning for 21 years and, along with his partner, Leanne Brothers, Pelmore now manages $100 million in assets for approximately 400 clients. The team has been working together for more than 13 years; in 2003, they moved their business model to a fee-only platform.
Pelmore says that in the near future, social media will have an important part to play in developing advisors’ books. For now, however, he is mostly steering clear of social media when it comes to business activities.
That’s not to say that Pelmore is out of the game entirely. He has set up a personal Facebook page and has familiarized himself with many of the main social media sites. His reasoning for being careful is simple: unlike the Financial Industry Regulatory Authority in the U.S., the Investment Industry Regulatory Organization of Canada has yet to issue any guidelines addressing the issue of compliance and social media. Individual firms in Canada have also been mostly silent on the issue.
As a result, it is often difficult to know whether social media activities are likely to run afoul of regulators. “If you are already out there [professionally] and you are ‘tweeting’ and ‘Facebooking,’ then you are naked,” Pelmore warns. “You are out there on your own and you could end up regretting that decision.”
Nonetheless, you would be well advised to begin preparing for a future in which social media does become an accepted online vehicle for communicating with clients. “Currently, investment firms have put social media ‘out of sight, out of mind’ because there are no compliance guidelines for it,” says Pelmore. “But I think that has to change over the next couple of months. Advisors need to talk to their firms, and the firms need to talk to IIROC. If we can do that, and get some guidance, then we can get going.”
Among other measures, FINRA requires firms that allow advisors to communicate using social media sites to ensure that permanent records of all communications with clients on such sites are retained. In addition, advisors must make sure they are not violating any existing compliance rules when they use social media for business. They should also refrain from giving any specific investment product recommendations while on social media sites.
If you are ready to take the plunge into social media, the first thing you need to prepare for while tweeting, blogging or Facebooking is to be accountable, says Pelmore: “Be prepared to be transparent. If you are not, you are going to be embarrassed — and it will end up being a bad experience for you.”
Talk to your compliance department first and find out what your advisor agreement states, and whether your firm already has a compliance policy in place for social media. Be prepared to defend what you say online and, when it comes to a personal website or social media page, take a “business card approach.” That means posting only the amount of information that is available on your business card. And take the position of a listener — rather than a participant — when it comes to online conversations.
• Top Advisor Summit: Treading carefully into social media: one advisor’s story
James Pelmore, an advisor with DundeeWealth Inc. in Vancouver who is on Facebook, Linkedin and Twitter, describes his move into social media, including the risks and benefits. WATCH
@page_break@Pelmore, along with his firm, is working on setting up a social media policy. He encourages other advisors to get the ball rolling. He is also working on a social media business strategy, which he plans to incorporate into his existing business plan. Failure to get into the game could result in missed business opportunities.
“If you don’t have a social media policy, or your firm doesn’t have one, by the end of this year, then you are completely missing the boat,” warns Pelmore. “It is coming just as fast as Web addresses did.”
Social media will eventually enable investment firms to monitor all forms of communication with clients: while some may see this Big Brother strategy as invasive, it will actually allow advisors to start using social media free of current concerns about what is and what is not allowed.
Indeed, the future of doing business on social media sites could be bright. “The firms are going to come up with strategies on how to use these tools,” Pelmore says. “They will likely be much more detailed than simply telling advisors what they cannot do. The social media strategies of the future will tell you how to create your brand, how to manage your brand and how to promote yourself and be seen in your community in the role that you are in.”
START THE PROCESS
In preparation for the day that Canadian regulators do get on board with social media, Pelmore advises, start the process of becoming aware of what is out there now.
If you are unsure of where to start, consider setting up a Facebook page. Start by providing only your basic business information, which has already been reviewed by your compliance department. This will allow you to learn the ins and outs of Facebook interaction without taking the risk of violating compliance rules. Record all communication with clients and refrain from giving investment advice online.
“Make sure you are following a really good strategy and you are effectively promoting your brand,” advises Pelmore. Doing so, he says, will lay the groundwork for reaping big benefits from social media communications in the future.
Setting up a professional Twitter account and becoming a “follower” of someone who is already well known in the investment industry will allow you to read industry “buzz” while keeping a low profile. In turn, look to see whom that person is following and stay up to date on hot industry topics.
“You want to be out there and aware,” says Pelmore. “You want to see your company moving in the right direction. Otherwise, your competitors will be a one step ahead of you.” IE