Yahoo Finance What You Can Learn About Your Financial Advisor on Social Media
Eloise Mills knows good communication when she sees it -- and she doesn't expect to see it on financial advisors' social media channels.
As chair of business to business public relations firm William Mills, based in Atlanta, Mills takes traditional communications, such as print newsletters, far more seriously than tweets or posts. "It's nice if they have a presence," she says of advisors' marketing efforts via social media. But, she adds, choosing an advisor is "far too important a decision to base on social media."
Thanks to stringent Securities and Exchange Commission regulations regarding marketing and communication, financial advisors have a pretty limited social media vocabulary, say consultants who specialize in financial communications. That explains why Facebook posts, blogs and tweets from accountants, financial planners and investment advisors tend to be generic.
[See: 7 Things Your Advisor Should Not Tell You.]
SEC regulations were written when social media meant handing over a business card. The fast-moving, everybody-has-an-opinion nature of LinkedIn, Twitter, Yelp and Glassdoor are fundamentally incompatible with staid SEC guidelines, consultants say. Most companies have multiple layers of approvals before so much as a Facebook post can go live, they say. Although SEC rules have started to loosen up a little, allowing advisors to have a basic presence on review sites, they can't share newsy items such as their opinions about the latest Federal Reserve decision.
Because social media comments can go viral in an instant, advisors' comments could affect the market. "These regulations are to protect consumers so that investors can't try to drive up a stock or so that consumers won't make decisions based on general advice," says Victor Gaxiola, customer advocacy manager for Hearsay Social, a social media firm based in San Francisco.
Advisors and investment professionals are slowly wading into social media, according to an American Century Investments survey of 309 financial professionals employed as financial advisors, brokers or registered investment advisors, which was released in May. About a third of advisors think social media is a "wise use" of their time, up from 21 percent in 2010, and 30 percent think leading firms are making the most of social media, up from 11 percent in 2010.
Advisors' top concern, listed by 36 percent of survey respondents, is staying on the right side of regulatory guidelines. Other social media-induced headaches include complying with their companies' internal social media policies and potential privacy breaches when communicating with clients via social media.
Despite this understandable hesitancy , you can glean some useful insights about an advisor's approach and personality from his or her social media content. Here's what to look for.
Use LinkedIn to check out an advisor's professional history and interests, says Amy McIlwain, president of Financial Social Media, a consulting firm based in Denver. "Look at their interests. Are they into golf or scuba diving? That tells you a little about their point of view, such as their approach to risk," she says.
[See: 10 Risky Investments Billionaires Can't Resist.]
A LinkedIn profile should also clue you in about professional presentations and indicate how engaged an advisor likely is with industry trends and opinion leaders, McIlwain says.
Testimonials from clients are commonplace on LinkedIn, Yelp and other review sites, but verboten for financial advisors, says Bonnie Ruszczyk, president of BBR Marketing, an Atlanta firm that specializes in professional services communication. That explains why an advisor might appear bereft of enthusiastic co-workers or clients on LinkedIn, where most people assemble a chorus on their behalf.
Although advisors can't share original content, they can share articles published by others they think are timely or insightful. What an advisor chooses to share can give you some idea about what he or she thinks is valuable information, Ruszczyk says.
Advisors can share educational articles or videos and research they or their firm conducted, says Jennifer Openshaw, author of "The Social Savvy Advisor," to be published in the fall by Wiley. Do expect advisors to share their philosophy but not their methodology. "They can't say, 'These are the results I got by working with someone else,'" Ruszczyk says.
[Read: How to Choose a Financial Advisor.]
But, "don't expect to have an actual conversation via social media," McIlwain says. "The advisor will direct your conversation offline."
There is one caveat, she adds: Be sure you are communicating with the advisor on a private channel. It is easy to start chatting openly and forget that you are sharing private information with the whole world. One-on-one email and phone calls are the best modes of communication, communication consultants say.
Do expect to be invited to group events and one-on-one introductory consultations. That's safe territory. A small group setting can help you see how the advisor handles questions from others in the group, Ruszczyk adds. "That's old-fashioned social networking," she says. "And see if you fit in with the others in the group. Is this advisor working with people who have over $1 million in assets, and you have $100,000 to invest? If so, the advisor might not be the right fit."
More From US News & World Report
