FINRA Changes Communications Rules

As we continue to see changes to legislation designed to inform clients and prospects within the financial services industry, we will look to FINRA for further definition of acceptable and complaint communication and marketing practices. Most recently FINRA Regulatory Notice 12-29, provides the industry with a consolidation of requirements for marketing to take effect in 2013.FINRA Notice 12-29  

The new regulations take effect in February 2013 and change the categories classified for communication purposes from six to three. The categories include Correspondence, Institutional and Retail communications.

Retail - All communications considered available to more than 25 retail investors requiring written approval from a registered principal prior to distribution. All social media content falls into this category due to its ability to reach unlimited viewers. Online forum posting is still considered an exemption from pre-approval and continues to follow the rules of what can or can not be said in a conversation.

Correspondence- Covers any written or electronic communication that is distributed or made available to fewer than 25 retail investors within any 30 day calendar period.

Institutional - Includes written or electronic communications that are distributed or made available only to institutional investors, but does not include a firm's internal communications. To qualify as an Institutional Investor, the NASD Rule 2211(a)(3).4 definition continues to be used.

The recommendation still holds true for archiving social media in preparation for regulatory or audit requests. Just as email archiving became standard practice, so follows social media content archiving.

 

Update on Social Media in the Wealth Management Industry

During the past 24 months the wealth management industry has seen unprecedented changes in how they have embraced social media as a viable form of marketing and communications.  In spite of the high hurdles set by the SEC and FINRA, the wealth industry has emerged showing significant signs of acceptance with the new media.

The procedures for compliance have somewhat standardized, tools have been adopted and more large wirehouse firms and wealth management organizations are moving forward with social media. Here are a few of the industry best practices sharing their story.

Scottrade

Scottrade is using all levels of social media for new business and client service. Their website features a full mobile app section with choices of iPhone, Android, BlackBerry and Mobile trading. https://www.scottrade.com/

In addition, they have harnessed their Facebook page to engage their prospect base with timely, informational content on changing investment/financial planning concepts. They are one of the first firms to use their Facebook page as a legitimate customer service channel. https://www.facebook.com/Scottrade

Their Twitter account features streaming summaries of topical articles and news stories. In addition, they are one of the first companies to utilize Twitter as a customer service channel, answering direct questions via Tweets. https://twitter.com/scottrade

High Tower Advisors

High Tower Advisors took a different approach to explaining how their firm differentiates from brokers with a cheeky video clip that went viral and has over 29,000 viewers. 

http://www.youtube.com/watch?v=Dg5RRMAc1GY&feature=channel&list=UL

Balentine

Balentine takes a different approach with their Facebook fans. It shares the more personal side of the company and its employees with clients and prospects, giving them an opportunity to see the firm from a different perspective. http://www.facebook.com/pages/Balentine-The-Art-Science-of-Investing/109250285760841

Their blog is dedicated to focusing on the thought leadership development of the firm by providing their readers designed specifically for their investment interests.

Putnam Investments

Robert Reynolds the CEO of Putnam takes a front stage on their Twitter homepage. By hosting the Twitter page, Mr. Reynolds becomes accessible to the clients and prospects of the firm through a dialog of Tweets. http://twitter.com/PutnamToday/favorites

Many firms are bringing their top executives into the social media engagement simply because that is what their audience wants. No longer is it acceptable for executive management to sit in their ivory towers and learn about their customers through the market research report that reaches their desk. Clients and prospects want to see, hear from and engage with the firm’s management team in order to place their trust with them.

In just a few years the number of firms that have entered the social media space has grown exponentially. Marketing and client engagement has moved from a one-way conversation to a dynamic engagement of prospects, clients and others.  However, just as the “Build it and they will come” mentality failed for early adopters of social media, today it is even truer as competition increases on the internet. The success of social media is not in the quantity of fans, followers and contacts you build, but the quality of the engagement that you inspire in your target audience.

There are some clear winning strategies that are also emerging from the industry as we seek to find the right solutions to marketing, client service and new business development in this rapidly evolving culture. Almost 90% of Financial Advisors using social media are working primarily on LinkedIn.  By leveraging this incredible business networking tool, Financial Advisors are finding its best value in prospecting, maintaining a book of business and networking on LinkedIn. The tool has made managing a pipeline of prospects more efficient and has opened up geographic boundaries for new business development that have held them back in the past.

Regulatory Requirements

Regulatory concerns still occupy a concern within the industry; however, the SEC has been clear that they view social media much as they do other forms of electronic publication and personal communication. There are rules for what can be done and what cannot be done and they have evolved into a clear set of standards for the industry.

Stationary content such as Facebook pages, LinkedIn profiles and other static content must be reviewed and approved by compliance prior to publishing. Dialog and engagement on Twitter and Facebook is not subject to prior approval but must follow the same strict guidelines as face to face communication has been subject to for years. No investment advice and no testimonials are allowed and all client recommendations should be made offline using the process that you follow for face to face recommendations.  Utilizing archiving software to store and document your activity is a standard procedure, just as archiving e-mails is required for client communication.

High Net Worth Individuals Want More From Their Advisors

The attached recent article shares some additional insights on what high net worth individuals are looking for from their Advisors.

What Do High Net Worth Individuals Want From Their Advisors

What is most surprising was the indication that 50 % of those surveyed would switch Advisors over a lack of responsiveness on the part of their Advisor. Not beating the benchmark by 30 basis points, not providing the optimally asset allocated portfolio, not integrating all of their financial holdings on a superior web platform....but instead...not returning their phone call. In today's rapidly changing web 2.0 world it is very easy to get caught up in how to deliver the next superior product, system or social media platform, while the core of the Advisor/client relationship continues to be based on trust, human emotions and reresponsiveness.

Those Advisors who are most successful know this and continue to stay focused on what matters to clients.

Press Release:

LBA Announces Advisor Support Program

Harrisburg, PA  June 7, 2012 –  Lana Burkhardt  & Associates (LBA) , a nationwide consulting firm to the wealth management industry,  announced the launch of their new outsourced “ Advisor Support Program” designed exclusively for wealth management teams and financial advisors.

The Advisor Support Program provides Financial Advisors and Wealth Management Firms with the comprehensive marketing support they need to build their practice.

“In this complex marketing environment, there are over 25 skill sets and a wide range of software required for comprehensive marketing support. The cost of bringing that talent in-house is cost prohibitive for most wealth firms” commented Lana Burkhardt, President of LBA. “Advisor Support Program allows firms to customize the services that they need to provide their organization with just the right amount of strategic and tactical marketing support. They have access to the full spectrum of skills and services that an in-house team could offer, at a fraction of the cost” she stated.

With the expanding use of the Internet and complexity of the marketing mix increasing, we view this outsourced solution as an alternative to the high cost of higher and maintaining the skills sets necessary to provide a total marketing solution.  

The Advisor Support Program provides complete customizing across areas of support including: web design and administration, collateral design, advertising, event planning, newsletter maintenance, blog development, technical writing, RFP development, COI programs and others.

Each service package begins with a comprehensive annual marketing plan to determine the best strategy to support new business growth. For additional details on the Advisor Support Program visit our product detail at:http://www.lburkhardt.com/Advisor_Support_Program.pdf.

Lana Burkhardt & Associates (LBA) is a full service marketing and new business organization specializing in the wealth management industry. Visit us at www.lburkhardt.com for additional information.

How Valuable Is Social Media In Your Marketing Mix?

Many marketers today are wondering if social media is really an important part of their marketing strategy or simply a waste of time.  Listening to many marketers sharing staggering social media growth rates and demographic data, you might start to believe their claims of social media as the holy grail of marketing. However, just as any part of the marketing mix, social media has its benefits and downsides and is by no means an easy road to success. When thinking about integrating this venue into your strategic marketing plan, a few things should be considered as you build your plan.

1.    Determine Who Your Target Audience Is And How They Use The Social Media Channel

Many companies fail to analyze how their prospects use the media and simply start setting up Facebook pages, posting to Twitter and collecting LinkedIn contacts in bulk. However, without the solid understanding of what information your prospects need from you and how often, these efforts become outdated, static and non-performing in terms of new business development.   You must follow the social media trail of your prospects to understand how to thoughtfully integrate into their conversation.  Only then can you become relevant to them and begin to build a reputation as a solid business partner they can trust.

2.    Less is More

All too often the dialog in social media forums is little more than online junk mail with firms providing too much useless information on blogs, websites, social media discussions and white papers.  Self-proclaimed “Thought Leaders” are filling the internet with highly professional white-papers, videos and research backed by little more than one person’s opinion on the subject.  With this proliferation of information, it is critical that as you begin to use these valuable internet tools that you think about only providing what is useful, valuable and relevant to your prospects.  One of the best ways to keep your dialog vibrant and relevant is to ask your clients/prospects what they need from you and how often. By doing this you build your program around their needs and priorities.

3. Let your audience do the work.

The single most valuable feature of online social networks is its incredible power to harness brand advocates of your firm to share with their networks. Whether it is passing on an article, letting them in on a special offer, sharing a video or simply recommending you via a connection, social media is the new word of mouth advertising. In order to harness this resource you must first provide something worth sharing.  Each industry and each audience defines that differently and it is up to you to understand your prospect’s propensity to share information and what motivates them to start spreading the word about your firm.

4. Don’t Get Caught in the Wave

Be careful of self-proclaimed social media experts. Marketers are great marketers and so there are a wide range of savvy marketing strategies being used to lure businesses into catching the social media wave of success.  Although there a lot of great professionals offering solid advice, there is no magic bullet when it comes to social media. The tools change daily, the strategies become obsolete quickly and it is sometimes hard to decipher where to begin.  The success rate depends on a wide range of variables and there are no quick answers to immediate success.

Having said that, I have worked with many firms who over time have gained new business success by careful planning, long-term commitment, thoughtful strategy and patience when using social media.

Social media is a conversation.  A conversation that has the power to drive and support your brand or spiral your brand to an all time low.  If you keep that in mind, then how you approach the venue will be handled with careful consideration as to who you employee to manage that conversation.

6. Select the right tools

Like any project, the right tools can provide you with success, without wasting a great deal of time. Not all social media tools are designed for all industries. Some of the uses for the primary tools include:

-       LinkedIn – A business social network that works well to support a business to business strategy. This also works well for companies targeting individuals with similar work, educational or skill backgrounds.

-       Facebook – Primarily a social network designed to share personal information. Businesses have entered the venue by using to build a dialog with their prospects/fans.

-       Pinterest – Provides a bulletin board approach to networking and can be used to showcase visual information with the audience: Photos, videos and other graphic rich information.

-       Slideshare – Provides a forum to share slide presentations with your target audience. It allows businesses to share their knowledge and build their reputation as thought leaders in their field.

-       Twitter – Share sound bites of information with followers. Businesses use this tool to provide quick updates, event highlights, and links to more robust information sources for their prospects.

Case Study: Bank Best Practices

The attached article provides you with the details on how Commonwealth Bank uses social media to engage their customers and prospects. Each month, we will identify another case study to share with you, showcasing how other organizations are using the social media venue.

http://www.cio.com.au/article/412478/how_kick_start_your_social_media_strategy_commonwealth_bank_focusses_facebook/

For more information on how you can build a sound strategy to support your online presence, please give us a call at 717-715-7158 or visit us at www.lburkhardt.com

Client On Boarding as a Competitive Advantage

The wealth management industry has lagged in dedicating focused resources on developing an efficient client on-boarding process to maximize the relationship established during the sales process.

In a 2011 study of 99 wealth management firms, Aite Group stated that ”More than 70% of the firms’ viewed client on boarding as either a back-office function that needs to be cost-contained or a front-office automation tool.  Only 30% viewed client on boarding as a competitive differentiator.”  An overview of the report can be found at http://www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=812.

One company stands out as understanding the importance of managing the client actively during the first several months as a new client.  Credit Suisse Investment Banking identifies an on boarding team to be the first point of contact for new clients that join their Prime Services platform.  The team is responsible for all functions of the on on boarding process including client set-up, client review, liaison to bank product specialists, credit and legal process, integrating technology and client systems and weekly client communications. They even highlight the process on their website and clearly see this as a competitive advantage. https://www.credit-suisse.com/investment_banking/equities/en/client_onboarding.jsp

The above link shares the service on their website and introduces a next level of client service to the high net worth client.

Most wealth firms spend a great deal of time and resources on identifying prospects, managing the sales process and bringing a new client into the firm.  Once they have signed on they are often turned over to junior staff and receive less attention as their sales teams move on to the next new business effort.  The on boarding process is often automated and becomes a process void of human contact. Yet this short-sided strategy overlooks the fact that in most cases the majority of new client assets move during the first 6-8 months as a new client account. What happens to that client during this time can mean the difference between a successful long term client relationship and a client who holds only a small relationship with the firm.  This window of opportunity to work with a client requires a well thought out and executed strategy to achieve long term success.

 When developing an on-boarding strategy the primary goals include:

-          Enhancing the new client experience

-          Understanding the longer term needs and expectations of the client

-          Broadening the client relationship to provider of choice status

-          Deepening the client relationship

-          Providing opportunity for increased client referrals

-          Ensuring that client retention is based on an efficient and client focused on-boarding experience

Although technology has a strong component in the on boarding period, too many firms have automated the process and lost the personal interactions that have the strongest impact on the success of the client experience.  In developing a successful business model for client on boarding it is critical to keep in mind a few areas that must be addressed:

-          A dedicated team that will deliver the on boarding strategy

-          A process to include technological efficiencies along with personal interaction

-          A defined strategy of steps that is carried out consistently to provide a standardized customer experience for each new client.

-          Measurements to determine the success of the on boarding strategy.

-          Client feedback to refine and enhance the process as client priorities change over time.

-          Accountability for the activities involved in the on-boarding process.

-          On boarding into ongoing client management strategy.

-          Client experience strategy using in-person, mobile and online strategies.

Today’s competitive environment has mandated that wealth management firms look closely at their sales, on boarding and client management process to provide a client experience that is unique and clearly  becomes the firm’s competitive advantage for future growth.  

Thought Leadership in the Wealth Management Industry

Social networks are growing at unprecedented speeds and showing no sign of slowing down. Wealth management firms must address both the opportunities and regulatory issues that surround this high potential source of new business before they step forward.

Nielsen’s online data shows that about half of the U.S. population visited a social network and that number grows every quarter. It is estimated that over 65% of all wealth management advisors are participating in Social Media forums as a way to stay connected to their target audience. As  wealth managers struggle to develop a strategy for defining their presence  in this interactive dialog on the Internet, a comprehensive approach should be taken to make sure that the process is effective, relevant, and in compliance.

Since the social media environment provides several compliance challenges for wealth advisors, many have started to build the important task of becoming Thought Leaders by using their current website to expand their content reach to their target audiences. As their social media policy is developed and extended to include other activities, this process can be extended into other social networking strategies for future growth.

In the past, the only methodology for building a Thought Leadership position with your target audience came from personal engagements, publishing articles and trying to appear on television or radio. Each of these strategies employed a long and arduous process of providing enticements to media outlets in hopes of having your material recognized and published.

Today with the mainstreaming of social media and technology platforms, there are an unlimited number of content sharing avenues that require little or no dependence on media representatives for publishing valuable content for your target audience. Essentially anyone, can create quality content, build a community of their target audience and begin to build a reputation as a valuable partner and Thought Leader to their target audience. The key is to determine what is most relevant and timely to your target audience.

Rethinking Your Value Proposition

As the wealth management field becomes even more competitive, firms will need to answer critical questions in determining their unique value proposition and how to deliver the client experience both digitally and in-person. 


Opportunities to increase revenue in the current economic climate are limited to those wealth managers who understand their clients and determine their relevancy and importance to the client priorities.


Product Leadership


Although a comprehensive and integrated product line offered expanded share of wallet in the past, in today's economic climate a product centric approach to clients fails to address the most significant priorities for many clients. Several years of economic turmoil and unstable equity markets have changed the mindset of clients and requires wealth managers to adapt to those changes.  Today's clients are distrustful, worried, risk-averse and trying to find value in the advisers they hire.  Changing product lines only add to the confusion and
doubt inherent in the client experience.


Redefined Relationship Management 


While most wealth management firms have tried to communicate their commitment to relationship management , many have failed to define that experience according to client's changing values.   Client's
have preferences on issues of communication, product selection, information and credentials and those firms who frequently understand these key issues are the winners in acquiring and maintaining a strong client base.


As technology increases, products proliferate and the economy continues in turmoil, staying close to the changing concerns of the client base are key. The good news is that technology has made keeping the pulse on today's wealth clients even easier with online and offline tools for client feedback.

SEC Issues Statement Regarding Social Media Usage Within The Wealth Management Industry

http://www.sec.gov/about/offices/ocie/riskalert-socialmedia.pdf

The SEC has issued an updated statement that is serving to provide additional guidance to Financial Advisers using Social Media in their practice. Click on the llink above for the full SEC update.  We expect to see more clairification to the guidelines this year as more and more wealth management firms move activities online.

According to the SEC update: "Investment advisers that use or permit the use of social media by their representatives, solicitors and/or third parties should consider periodically evaluating the effectiveness of their compliance program as it relates to social media. Factors that might be considered include usage guidelines, content standards, sufficient monitoring, approval of content, training, etc. Particular attention should be paid to third party content (if permitted) and recordkeeping responsibilities."  

Prior to starting any actitivities online it is critical to prepare a detailed Social Media Policy and provide proper training and guidelines to all Advisers using the tools online.

FINRA Has Updated Position on Social Media Practices for Financial Advisers

The link below provides Financial Advisors with the most recent comments regarding FINRA guidelines for Social Media practices.


http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20111230/FREE/111239990/-1/INDaily01&dailycount=1&issuedate=20111230