Now that regulators have finalized their guidance for financial institutions on approved uses of social media, firms are just starting to let their financial advisors communicate with customers in social networks — but with great caution so as not to violate a new rule.
ING U.S. is a case in point. It recently began letting a small group of financial advisors interact with clients on Facebook and LinkedIn, using technology designed to block advisors from running afoul of federal rules. Advisors interact with their clients, for instance, by congratulating a customer whose son recently get accepted into the college of his choice, thus opening an opportunity for the advisor to sell a new investment product.
"Our strategy is, if there's new technology and consumers will be using it, we want to understand how it works and how we can or should participate," says Ann B. Glover, the chief marketing officer at ING U.S.
Financial firms can use social media in many ways: to promote their brands, to market community projects, to handle customer complaints. The Financial Industry Regulatory Authority and Federal Financial Institutions Examination Council rules place a number of restrictions on these activities, largely to enforce existing consumer protection laws, such as Truth in Lending. But many of the steps they require, such as monitoring and archiving all posts generated by bank employees, would be extremely difficult to do manually. ING's experience with social media compliance software is an example of one way to comply with new rules without taking up employees' time.
Glover's group started using social media in completely non-controversial ways to show the organization that there was a need for social media and that it could be done safely. When ING sponsored a series of marathons in Hartford, New York and Miami, it built Facebook communities for runners — a safe topic for the bank.
That positive experience made it possible for the marketing team to convince management of the need to experiment with social media in a business context.
Also, as part of the learning experience, ING U.S. is sponsoring the orange room on the Today show, where Carson Daly shares viewers' tweets and sometimes engages them in conversations about retirement.
"We're doing that to show that consumers want to know about this information and that we can help participate in those conversations," Glover says.
The firm is also experimenting with letting its financial advisors use social media. It's been running a pilot with 10 representatives that it plans to expand to 100 this year. The eventual goal is to involve all 2,400 financial advisors.
"We'd love to have our financial advisors participate in social media, and we know that there are all sorts of guardrails that need to be in place to do that," she says.
The guardrails are the job of Socialware, a social media compliance and archiving solution. Similar to programs provided by such firms as Hearsay Social, Nexgate, Actiance, Finect and Gremln, the software archives social media posts and monitors posts for words and phrases that could potentially violate rules.
Socialware can also block certain features on social media networks that a bank may not allow. For instance, a "like" in Facebook can be perceived as a specific recommendation of a person, service or product. The same is true for some retweets and sharing of content that has not been pre-approved. Similarly, FINRA considers a financial advisor's social media profile to be a static advertisement that must be reviewed for accuracy by a compliance officer.
"Most of the firms we work with don't want advisors to give endorsements because they inadvertently endorse a product when they didn't intend to do so," says Bruce Milne, chief marketing officer of Socialware. "We've found that most registered reps do want to comply, they just don't know what the rules are or how to."
An ING user passes through Socialware to get to LinkedIn. The software grays out certain features, such as the "like" button. It lets advisors post documents from a library of bank-approved content, see how their content is doing, and view information about people who are engaging with their content. Socialware uses lexicons to hunt down words that should never be used by a financial advisor, such as "free" and "guarantee," and flags them for a compliance review.
So far, the ING reps are permitted to use only LinkedIn and Facebook. "We're encouraging and coaching them to use those two avenues to build deeper relationships with their current clients," Glover says.
Some in the industry still wonder if clients want their financial advisors following them in social networks. But Glover has no doubts.
"We know that our financial advisors who are very successful do have deep relationships with their clients and help them manage their money," she says. "I think these barriers are coming down."
Andrew Norman, a financial planner who works for ING in Seattle, uses Facebook and LinkedIn to build a presence as an expert on financial and business topics. He sometimes posts personal thoughts on business books, articles and current financial events, but 95% of the time he taps the library of ING Financial Partners' pre-approved content that is housed in the Socialware system.
Norman typically spends a couple of hours every day connecting with about a third of his clients and prospects on social media. One time, he saw on Facebook that a client's son had been accepted into and planned to attend a local university. So he went to the school's bookstore, bought a school hat and brought it over to his client's house as a gift. In another case, after meeting a business contact in person, he connected with that person on Facebook, which led that contact to introduce Norman to his brother, a corporate executive who needed a financial advisor. The new client generates about $120,000 a year in revenues.
Today, ING is not actively seeking a return on investment on this project. "We're all about experimenting," Glover says. "Evidence points to this being a reasonable way for financial advisors to enable their success. I'm hoping as we go from pilot to activation, we'll have more results we can show."
The ability to use social tools could be helpful to recruiting efforts. "We'll quickly get to a place where when a financial advisor is choosing a broker/dealer network, they want one that uses social media," Glover says.
And social media may help ING U.S. with its next big marketing challenge: getting customers accustomed to its brand change to Voya Financial later this year.