Why So Anti-Social Media?

MIAMI — The financial services industry is still reluctant to embrace social media, even as demographics make a compelling case to do the opposite.

The fastest-growing age group on Facebook is women 55 to 65, a huge chunk of many advisers' client base, Hadley Stern, vice president, Fidelity Labs, with Fidelity Investments, said Tuesday at the American Bankers Association Wealth Management Conference here.

Meanwhile, the wealth transfer from the older generation to younger ones suggests advisers should be active on Twitter and LinkedIn as well as Facebook. Facebook is the largest site by far by time spent on site, Stern said, with the average user spending 55 minutes every two days on it.

"Deciding whether to get involved is deciding if you want to be part of the conversation," Stern said. "There will be a conversation with or without you."

Compliance issues remain the downside for many. "It takes five minutes to sign up for Facebook, but three to four months to make a social media plan that makes your legal and compliance departments satisfied," Stern said.

It is clear that the regulators are watching. The Financial Industry Regulatory Authority has released a regulatory notice with guidance on blogs and social networking websites, and a second Social Networking Task Force will meet in March, with more guidance coming by the end of the year.

In January the Securities and Exchange Commission began requesting information from some investment advisers as part of a social media sweep exam.

Denyette DePierro, senior counsel at the ABA, said not only are regulators watching what is happening on Facebook and other social media sites, but they are actively engaged on the sites. "Even if you're not going to get involved with social media," she said, "stay aware of the conversation."

Some have found social media a good way to enhance their relationships with clients. At the TD Ameritrade Conference in San Diego, Christopher Van Slyke, a partner and co-founder of Trovena LLC, said Facebook has been a boon for his business.

"Why is Facebook the third-largest nation on earth? It's not what you know, it's who you know," Van Slyke said. "Facebook allows you to leverage who you know."

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