LPL Financial Inc.'s advisors are wading into social media at an impressive pace, and they are not alone.
The nation's largest independent broker-dealer, LPL recently signed a contract with a social media compliance service and has signed up 1,000 advisors to use sites including Facebook, LinkedIn and Twitter. It is adding about 100 more each week, said Andy Kalbaugh, executive vice president of business consulting at LPL Financial.
"For the right advisor, this is a very, very cost-effective way to reach a lot of people," Kalbaugh said, "both in marketing efforts as well as making contact with clients."
LPL hired Erado Message Control Solutions in Renton, Wash., to monitor and archive advisor activity on social media sites in compliance with Financial Industry Regulatory Authority requirements. LPL Financial is a wholly owned subsidiary of LPL Investment Holdings Inc. and provides technology, brokerage and investment advisory services to more than 12,000 financial advisors.
The broker-dealer offers a set of guidelines on approved media as well as training modules to help advisors learn how to use them. Advisors can use preapproved materials, including articles, videos and research, Kalbaugh says. They can customize those materials for clients and communicate with clients in real time.
Some LPL advisors have already been using Twitter, LinkedIn and Facebook to update existing clients on portfolios and investment strategies, attract new clients and send out promotional messages, Kalbaugh said.
Some have found even more creative uses. They have used the online forums to get clients together for book-reading clubs and to share articles of interest. "A lot of advisors understand their clients very well," he said. "It's an effective way to share, to stay in touch and show that they understand them and know their interests."
While broker-dealers and investment advisors increasingly embrace new media, compliance issues have held back financial advisory firms from jumping into social media as quickly as some other businesses. The desire to control a firm's brand and the activities of its advisors also has been a factor, said Mike Byrnes, president of Byrnes Consulting.
"If you empower thousands of advisors to go out and do something, especially at the wire house level, that's a very scary thought for some senior managers," Byrnes said. "They need to get over that level of control." Putting systems in place to archive and monitor usage can help alleviate those concerns, he said.
With Internet use skyrocketing, firms are now seeing that it makes business sense to be involved, Byrnes said. "If you're looking to be found by clients; that's where they are."
