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New Measures of Success in Social Media

By Chris Latham January 28, 2014

For a financial advisor, doing nothing on social media but checking LinkedIn once a month is the modern-day equivalent of flipping through the phone book once a week to cold-call a few prospects back in 1990. Experts say it’s not nearly good enough.

While 75% of advisors use at least one social-media site for business, according to a 2013 survey by Putnam Investments, fewer than a third use anything other than LinkedIn. By every indication, social media is growing more popular with investors, and they don’t stick to just one site. Yet advisors are hesitant to embrace the other networks — including Facebook, Twitter, Google+, Pinterest and Instagram — in large part because of uncertainty over how to measure their effectiveness. That’s why consultant Robert Sofia, a cofounder of Platinum Advisor Strategies in Summerfield, Fla., thinks it’s time advisors changed their attitudes toward social media.

“You don’t hear people talking about the return on investment of e-mail,” says Sofia. “It’s a necessary tool for doing business.” In fact, he adds, e-mail and social media are tools for communication, not for marketing. “It’s not something like a direct-mail campaign or magazine ad or TV spot where you can say here’s my cost, here’s how many leads I generated, here’s my investment.”

Metrics do exist, and Sofia encourages advisors to be aware of them — for example, the number of Facebook fans and “likes,” or how many comments and retweets one gets on Twitter. For a bottom-line metric, there’s the opportunity cost of hours spent online versus hours that could have been spent meeting clients’ needs. Sofia also points out that advisors can use third-party vendors, like HubSpot and HootSuite, to track social-media usage and analyze audience engagement.

But vendors have limits, he warns. Advisors must learn the different purposes and demographics of each social-media platform to figure out how best to engage the audience.

Social Experiments

That’s an increasing chunk of Andrea Guerra’s job at Comprehensive Wealth Management. She’s marketing coordinator at the Lynnwood, Wash., firm, which manages over $327 million. With the guidance of chief operating officer Shilo Lockett, Guerra tries to make Comprehensive Wealth Management’s posts across various websites reinforce the firm’s overall social-media goal.

Andrea Guerra

Specifically, that is “fostering the relationships we have with our existing clients and partners,” says Guerra. “For prospects, it’s just one touch along the road to deciding whether they want to work with us.” Social-media engagement also increases client retention by reinforcing friendships, adds Lockett.

Comprehensive Wealth Management plunged into social media three years ago, after executives attended an industry conference where the topic was hyped. Firmwide, its staffers spend about 90 minutes a day updating social media across the top six websites, with Facebook as the main hub.

This involves willingness to experiment. As of Jan. 27, the firm’s Pinterest site had 22 galleries and 395 pictures. They include pictures of staff at client events, infographics with financial tips, close-ups of healthy cuisine, and adorable frolicking pets. The material has generated six “likes” and 52 followers. Although the jury’s still out on Pinterest’s success, Comprehensive Wealth Management has “secret plans” to increase engagement for the site this year, Guerra says.

Blogging can be a gateway for stand-alone advisors. Amy Jo Lauber has been using WordPress software to blog since July 2010. The fee-only planner, who runs Lauber Financial Planning in West Seneca, N.Y., found she loved writing and soon began posting regularly on Facebook and LinkedIn. Lauber is on Twitter, too, but, as she’s no fan of its 140-character limit, rarely uses it.

Social-media success isn’t about performance metrics for Lauber, who spends about 90 minutes a week on the various networks. WordPress provides data on the number of her posts, most popular stories and location of viewers. But those stats have less influence on her approaches to blogging than the fact that readers are commenting.

Amy Jo Lauber

Some advisors use social media to promote events. As head of Redstone Financial Advisors in Falls Church, Va., Polly Rosenstein uses social media to get more people out for women-focused financial-planning workshops. To this end, she tracks user performance and demographics of her sites.

“Just as we now don’t think a business is a real business unless it has a website, I think having a social-media presence is going to be essential to be considered a real business in the very near future,” Rosenstein says.