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How LinkedIn, Facebook and Twitter Can Help or Harm Your Business

By Garrett Keyes April 6, 2018

Social media usage is gaining prevalence in client acquisition for advisors and positioned to continue expanding into the future, a recently issued 2017 Putnam Investments survey reveals. But advisors are split over how they can use the technology without falling foul of Finra.

Some 86% of advisors successfully used social media to win new clients last year – a 6% increase from 80% in 2016.

“The new way for the community at large to find you is through social media and those who are experts will have an advantage,” says partner and senior institutional consultant Christopher Cooke of Cooke Financial Group of Noyes. “For reaching millennials and beyond, this is going to be critically important.”

“We primarily use LinkedIn,” he continues, “and our goal is to have an expert on social media” to handle social media outreach and recordkeeping.

Cooke is not alone in focusing on LinkedIn for client acquisition. The Putnam study reveals LinkedIn is the most used social network for advisors, with 73% of FAs availing themselves of the platform. Facebook ranked second with 56% and Twitter third with 46% of advisors on board.

But firms have begun pushing beyond LinkedIn and expanding social media use to other channels. Founder and president Paul Ried of Seattle-based Paul Ried Financial, says his firm uses “social media several ways. We use LinkedIn, Facebook, YouTube, pretty actively do blog posts on our website, optimize our Google searches,” and have “two people on the team where part of their job is social media.”

From such outreach the firm receives messages from “folks that say, ‘We saw your video and post’ or ‘We heard about you from a friend.’ When they have heard of us from two or three sources, one is social media,” Ried says.

Referring to the use of social media in client acquisition, wealth management advisor Louis Cannataro of Cannataro Park Avenue Financial says: “I know you have to be present on social media, because this is how we all operate and everyone is going online to get background information.” But Cannataro explains his firm treats social media as “a way for investors to get more comfortable before they come in the door.”

“We’re on Facebook and LinkedIn and know our presence on the internet is extremely important because people go there to do their initial check, but right now, almost 100% of our business comes from referrals,” he says.

Christopher Cooke

With the growing importance of social media as an outreach tool comes regulatory issues. Finra regulatory notices 10-06 and 11-39 direct advisors to “retain records of digital communications related to ‘business as such,” which depends on a communication's “content and not the device or technology used to transmit the communication.”

The clash of technology and regulation has led to differences of opinion between advisors over how social media can be used – if at all, experts say.

“I know the main rules of the industry say you have to have a record of what you put out there. LinkedIn is well known and understood, but it becomes an open-ended question of what is allowed [for other social media networks],” Cooke says. “Clearly there are people using it to great effect. Certain retirement advisors have hundreds of thousands of Twitter followers. [The question next becomes], how do you use social media within the rules?”