Powered By Financial Industry Insiders, RegEd Social Media Archiving Solutions, Powered By Arkovi, Stay Close To Customers’ Needs

Regulated financial services firms tend to take their time to evaluate new communications approaches, and they prefer others to stress-test new technologies before they embrace them. However, a groundswell of interest is prompting broker-dealers, registered investment advisory firms (RIAs), asset managers including mutual fund and exchange-traded fund (ETF) providers and banks to review this new means of communicating and its appropriateness for their business.

What is the enabler then for social media in our industry? It is really three things:

1) The ability to archive and monitor off-domain social media activity

2) A clear guide to navigate the regulations and best practices for compliance

3) The ability to research and validate successful case studies for use of social media

Acutely aware of the challenges that social media presents, we bring this book to you with the knowledge we gained working within the industry as your peers as well as tackling the procedural and technical challenges social media presents.

Our objective is and has been to lead financial services into social media.

How Far Have We Come

Social Media is both challenge and opportunity. A powerful, far-reaching ecosystem of communications and interaction where all of our customers already reside – paired with a substantive hurdle of using consumer platforms that are not necessarily friendly to complying with the rules that guide our industry.

To get us started we interview one of the social media archiving pioneers and our very own Blane Warrene.

Q. Blane, how would you characterize financial services’ current interest in social media now that we’re headed into 2013?

A. Interest is high across the board. Communications creators—and we’d also include financial advisors, marketers and investor relations—are dying to get out there. Most marketing people of any stripe understand the impact of community. They get it.

However, the regulations sometimes temper that interest, and Legal and Compliance professionals need a few assurances. One is that all activity is within the bounds of what can be done and that there’s an ongoing way to monitor that. The second concern is that all activity be archived and able to be retrieved for e-discovery purposes. At larger firms, IT is involved to be certain that the data collection is following best practices.

Our perspective on the industry’s pace of adoption is based on announced implementations, the conversations that are going on right now, and a significant amount of activity that’s happening under the radar.

The most openly active adopters have been RIAs subject to the SEC’s advertising rules. At this time, as long as advisors are archiving, have an established policy and governance procedures, they’re in compliance with the SEC.

FINRA-regulated broker-dealers now have enough information to proceed with social media from FINRA Regulatory Notices over the past three years. Most notably new guidelines that will take effect in February 2013 that provide more clarity and definition on how content is defined and supervised.

From 2010 even into mid-2012, there was still a hesitation based in part on regulatory ambiguity and in some cases the fear of painting a target on one’s self. I don’t find that something that is ongoing. We have spent several years educating on what it takes to take a social program public within a broker dealer, and are seeing more and more firms move from “pilots” to true implementations.

Q. Tell us about how your customers are approaching social media.

A. More than anything else, we find that there’s a need for education; Education about social media itself and how to optimize the time that’s spent using it. We see that as we educate, the business grows.

And, because regulations do apply, there’s a need for education on what’s in and out of bounds. We also think the industry as a whole needs a rolled-up view to understand specifically how social media is being adopted. There are infinite opportunities, this is a moving target and firms need to pace themselves. A lot of planning has to be done before a firm jumps in.

Frankly, that’s where we think we add value, because we speak the language. It’s interesting because the focus is social media, so you might think that all the tire-kicking is done online. We find that’s not the case. We’re meeting as many people in person as possible. We’re at every major event because we think we can help with both awareness and understanding.

There’s a lot to this—a new way to communicate, a new technology requirement, and a constantly evolving landscape. People we talk to seem relieved that they don’t have to teach us their business. We lived in the industry. We understand what they do and we understand the regulators.

Q. You support the one-office RIA and the global investment management firm—what are the differences in what they need?

A. Advisors ask us, “What do I need to do to be able to sleep at night and know that I’m in compliance with the SEC rules?”

As for the SEC sweep letters, advisors have seen sweep letters for years. The SEC has swept on products, philosophies, approaches, investment styles, allocation theories, and FINRA has done the same thing. One year it’s equity-indexed, then it’s variable annuities for age groups. They’re very well trained in receiving sweep letters. Advisors simply want to insure they can use the right tools to meet compliance requirements and take care of their customers.

We see this as a process and workflow as much as a systems issue. Certainly technology provides a key component of the solution – yet it is also process. We are actively working with our customers to identify the steps in the process to identifying strategy, policy and tactics. Those are the keys to successful implementation.

With the compliance concerns out of the way, advisors then ask: “How can I be active in social media to actually produce results in ways that I can measure, besides just making noise?”.

That is where the best practices for running social media in your business come into play – having a plan for content, understanding tactics for connecting and building strong relationships – and candidly – remembering to bring those social connections back to your, if I may, offline world – where you meet, discuss and work together.

Q. …and the largest firms?

A. At the larger firms, social media strategy and archiving is the linchpin. We enable the users, we provide assurances for the overseers, and we make certain that the archive is supportable by IT. It’s the classic complex business-to-business discussion that begins with the need to educate on a quickly evolving topic.

A persistent question from IT and Compliance is whether features can be turned off. The answer to that, of course, is no. Social features cannot be turned off – these are public networks and systems accessible from anywhere. That’s an unrealistic expectation and we worry that those who believe it’s possible are not thoroughly understanding that social media is beyond any one firm’s control. Social features can be turned off within a portal accessed from the workplace. However, what about other places and other devices?

A policy and guidelines approach—i.e., this is how we’re going to behave, these are the rules we’re going to follow and we have policies that address what we use—is what’s required. Teach your employees how to behave like adults, as well as employees representing a brand. That’s how effective firms do it. The reason you have a surveillance dashboard is in the event that you have a bad apple, you need to be able to find it. However, technology is no substitute for management.

The newness of the category and the emergence of startup providers can be a challenge for larger firms. Some of that is perspective. They look at data as data and they don’t distinguish between the value of the data. The value of back office data has to be absolutely secured with iron and put under lock and key. It requires a very technical, sophisticated roadmap to be able to manage that.

I remember early on when I was a technology director, I looked at all technology projects as the same and believed that each had to go through the same life cycle. Over time, you begin to recognize that there are very sensitive development lifecycles for the core of your business…and then there are the other projects….

Thus with social data – it is not about hiding the data under lock and key – it is about the value of the aggregated data and what business can learn from it. Social media content is extremely valuable to a brand.

Q. Are those firms engaged in social media seeing results?

A. Yes – and we monitor this ongoing through our research efforts. We look at data a couple different ways. On one side we partner with a major university and explore public posts and sentiment as it pertains to financial advisors, market cycles and social media. In addition we explore our total archives in aggregate and look for trends in engagement, content volume and where the social traffic is occurring.

For example [see sidebars] – we tracked social data in 2011 and 2o12 for year over year trends in social usage by our customers and saw clear indicators for increasing engagement.

Q. What are the differences you see in the way each is being used within financial services?

A. The majority of our clients are using LinkedIn, but that’s not where all of the volume is. LinkedIn is utilized as a networking solution and slowly emerging as a content distribution platform right now. It’s Facebook, Twitter and blogs that are heavy in content volume. Google+ and Pinterest are quickly chasing after those three in content.

Early on, people didn’t know they needed to archive. Two years ago, people didn’t think that their LinkedIn profile was social media. It’s that they were trying to connect and that they were generating content that was off their firm’s domain which needed to be archived. That’s the nature of the beast. That lone status update has to be captured.

In 2009, many people wondered why they’d use Facebook for business. They’ve changed their tunes now that they’ve seen the engagement that’s possible.

Facebook is where business blends with the personal. One of our ongoing efforts to help the industry track adoption is our infographic series. In our first report, we showed that half of our users were using Facebook and that 60% of what we were archiving from Facebook was photos. Many of them are personal, but many are also from business events. A lot of folks archive the photo albums they put on their Facebook pages with photos from business get-togethers. Photos are effective ways to engage.

Q. What’s next?

A. Certainly the obvious is mobile – we are seeing significant shift to mobile for both how consumers and customers’ access and use content as well as how much social content is published by our customers.

We also see more interactive content emerging in financial services. More exploration of using video, posting audio material and presentations. It also reflects how unlike other previous technologies – social media entails coordinating multiple, unrelated platforms in a complete content strategy.

Based on our experience and closeness to the community, our goal is to always be speaking with our customers as well as anticipating what will be needed next and build it.

To be notified of subsequent Q&As, please send an email to [email protected].