Firms look to social media for growth

Socialware works with more than 100 financial services firms in North America, including some U. S. firms with Canada-based parents. Socialware first offered social media-related compliance tools in 2009 to help financial services firms monitor and archive social media activity.

Socialware then recognized the need for services and applications that help financial services firms optimize the use of social media. Over the past three years, Socialware has expanded its services to include software to build online contacts and referrals, expand a client company’s brand, and track online results and business success – as well as offer social media training for advisors.

“Firms quickly found out that they didn’t know how they wanted to use social media and they didn’t have a social media strategy in place,” Bockius says, “so this created several needs for the industry.”

Initially, financial services firms in Canada were hesitant to embrace platforms such as Facebook, LinkedIn and Twitter because of concerns over compliance. Then, the Toronto-based Investment Industry Regulatory Organization of Canada (IIROC) published its final guidelines in December 2011, which said client communication via social media should follow the existing rules for advertising, sales literature and correspondence.

When social media began to gain popularity, financial services firms had installed monitoring devices – and many firms banned advisors from using these websites altogether. But these compliance concerns are now fading and firms are beginning to embrace the new tool.

“It’s quite obvious that social media isn’t a fad,” says Sarah Carter, general manager of social business with Belmont, Calif.-based Actiance Inc. “It isn’t going to go away. And, today, it is much more about not being left behind.”

Since inception, Actiance has expanded its business to respond to growing demand from firms looking to manage social media strategies. In May, Carter formerly vice president of marketing, took on her current role – and she now works full-time on expanding this division.

“Since we brought out our social [media-] monitoring product two years ago, we have seen such a rapid pace of change,” Carter says. “Firms went from thinking, ‘Hey, this could be really cool, ‘ to ‘How do I get this started now?’ And they want to take action immediately.”

Actiance, which has 25 Canadian financial services firms as customers, including the Big Five Banks, has been working with customers since the U. S.’s Financial Industry Regulatory Authority (FINRA) released its social media guidelines in January 2010. Carter has met with FINRA, IIROC and Britain’s Financial Services Authority repeatedly and, she says, these regulators have come a long way: “Two years ago, they didn’t really understand social media, and all the guidelines were written on the basis of ‘Why would anyone want to do this?’ And now, that has changed. It is so great to see the understanding that they have of social media and why firms want to use it.”

Many support firms now offering extended social media services started out providing just data archiving because of regulatory concerns. Now, these firms have expanded their services. One of the first archiving firms was Portland, Ore.-based Smarsh Inc., which was established in 2001 as an email-archiving firm. Since then, it has evolved to include archiving of the web, mobile messaging, instant messaging and social media.

Setting up social media business strategies was certainly not a primary focus for the firm, says James Douglas, director of customer experience at Smarsh. But the firm has since started to work with clients who are looking for more. “In 2009, there was no guidance on social media,” Douglas says. “A lot of firms were hesitant to become pioneers because of a lack of understanding and the risks involved. Now that the scare factor has died down substantially and there are more stakeholders at the table, things are definitely changing.”

Douglas says his conversations with clients have evolved over the years and he now offers clients more than just archiving options. Today, Smarsh customizes webinars for clients on several social media topics, including best business practices, client prospecting on LinkedIn, how to use the top sites and marketing strategies.

“We have definitely seen a shift in our clients,” adds Douglas, “from the fear behind the regulators to how can we use this as a new tool to grow our business.”

This attitude has allowed many of these social media-monitoring firms to expand their offerings.

In August, Socialware launched a “network listening” platform that allows advisors to be notified if a significant life event occurs for one of their social media networks’ connections. Says Bockius: “Advisors need a way to manage one-on-one relationships efficiently and at scale.”

© 2012 Investment Executive. All rights reserved.