Financial advisors shouldn’t have to be on their own when it comes to learning about the various social media platforms and how to use them. Rather, their firms should be proactive in providing social media training at all levels of an organization, says Stephen Cheeseman, vice president, associate general counsel and U.S. division chief compliance officer with Foresters, the Toronto-based financial services provider.
“We all take for granted how knowledgeable people really are in social media because it’s always in the media, but it is a dangerous medium to be using blindly,” says Cheeseman, who shared his views in a panel discussion at the 2014 Digital Marketing for Financial Services Summit in Toronto on Tuesday. “We train in everything from human resources to privacy to law, so this should be no different. We need to educate ourselves on social forums.”
Cheeseman recommends that financial services institutions start setting up social media-training sessions for its advisors that could run as frequently as once a month. They could start right from the basics of how to use a social media platform correctly and not just educate advisors on what content they should be posting.
In addition, training sessions should be extended to include all head-office employees, back-office staff, compliance officers and operational departments, Cheeseman suggests: “You can’t be afraid of [social media] anymore and when your sales agents know more than you do at head office, you have to ramp up your game.”
Whether advisors know how to use social media or not, 96% of them have a LinkedIn profile regardless of whether their firms approve it, says Bruce Milne, executive vice president of SocialWare Inc. and a member of the panel. Furthermore, many advisors might not know the opportunity that social media really presents.
“The fastest growing cohort on social media are those who are 44 years old to 55 years old, which is the target market for many advisors,” Milne adds. “Seventy percent of those people indicate that they would like to connect to a financial advisor online, while only 6% of those people are actually connected to an advisor online.”
John Bellino, an insurance advisor with Guardian Life Insurance Co. who was also part of the panel, learned the potential of social media in prospecting quite quickly.
“It’s a tool that has allowed me to bring in new people from a standpoint that I no longer had to ask a client who they could introduce me to because now I can instantly see who they are connected to,” Bellino says.
Bellino admits there is a learning curve when it comes to using social media for business purposes, and he even made the mistake of setting up two different LinkedIn accounts before realizing that it wouldn’t be beneficial for his practice. But over the past two years, Bellino has continued to build his social media presence and has connected with many of his clients that way.
Over the past 11 months, Bellino has been able to get 214 introductions from 15 of his existing clients as a result of his presence on LinkedIn. From those introductions, he was able to sell $150,000 in life and disability premium and $12 million in life insurance for five new client households. In addition, he currently has 11 other client households who are in the stages of underwriting and 33 prospects that are in the discussion stage.
“I’m going to be 50 in a couple weeks and I don’t care for technology,” he says, “but I know it’s out there, so, instead I asked how can I turn this into an instrument that keeps me in practice and relevant in my clients’ lives for the next 25 years.”
Despite the potential benefits that advisors may see when using social media, there remains a major roadblock in the lack of social media guidance from financial services industry regulators.
“It’s not a secret that the Canadian regulators have admitted they watch what the U.S. is doing first when it comes to regulating social media,” Cheeseman says.
And despite the Investment Industry Regulatory Organization of Canada (IIROC) having introduced guidelines in 2011, advisors continue to be unsure what can and cannot be posted on social media.
Thus, advisors should always discuss their social media initiatives with their compliance departments. Still, Cheeseman recommends the U.S. Federal Financial Institutions Examination Council’s (FFIEC) social media guidelines as a good point of reference for advisors who might still be wary of jumping onto social media.
“These set of principles are much more detailed in my view than the Canadian guidelines, and if you adhere to those than that would be a good starting point,” says Cheeseman “Because eventually those guidelines will be making its way up here.”