Advisers cautious about social media

Nearly three-quarters of FT 400 advisers have profiles on networking site LinkedIn, but some top performers doubt whether using social media sites such as Facebook or Twitter improves business.

That is understandable, given the average client is over 50 and unconcerned about online “friend” counts.

Investors tend to see posts limited to economic trends and corporate marketing campaigns, largely because compliance guidelines prohibit advisers from recommending stock purchases or soliciting client endorsements via social media, while requiring firms to store communications for record keeping.

Morgan Stanley began to explore the use of websites in 2010, says Valentina Chtchedrine, who runs the bank’s adviser social media programmes. That is when the Financial Industry Regulatory Authority issued guidelines.

“I don’t think every adviser will be using social media, but we will see growth in the next couple of years,” she says. “Clients are increasingly digitally savvy, so many will prefer to communicate [through] these media.”

About 5,800 of Morgan Stanley’s 17,000 advisers have full access to LinkedIn. On Twitter, some 1,000 advisers can follow users and post from a library of preapproved content, while 100 advisers in a pilot programme can post their own original content, Ms Chtchedrine says.

Financial institutions have been expanding their social media presence since the US Securities and Exchange Commission clarified last April that companies can use such outlets to announce material information. But leading brokerages still maintain tight control over how advisers can use these websites.

Wells Fargo Advisors is the most popular brokerage on Facebook, with more than 170,000 “likes”, while Merrill Lynch carries the most advisory weight on Twitter, with some 130,000 followers.

The potential for online popularity inspired JPMorgan’s ill-conceived plan in November to let the public post questions to a Twitter account. #AskJPM soon garnered subversive musings about whales and who is allowed into heaven, among other topics.

Merrill Lynch allows its advisers to create LinkedIn pages, but not to post financial content on them.

Advisers can follow others and message clients through the site. Investment and economic information comes from Merrill Lynch’s corporate page and a pilot programme is in the works for select advisers to share preapproved content on LinkedIn.

Many advisers at independent firms run rings around their bank-based peers on almost every portal.

For example, Michael Kitces writes a popular blog and tweets about financial planning to his 13,000 followers while serving as director of research at Pinnacle Advisory Group in Columbia, Maryland, which manages more than $1bn.

A 2013 study by Putnam Investments found 29 per cent of 408 advisers surveyed had used Facebook and 21 per cent used Twitter for business during the previous year. Some 31 per cent used Google Plus, a less popular portal. Although the study did not mention it, scores of adviser photos can be found on Pinterest, which hosts image galleries.

But even successful independent advisers often play it safe. Adam Estes is an FT 400 adviser whose Estes Group at Hilliard Lyons, the wealth manager, manages $800m from Bloomington, Indiana.

He has landed a couple of clients who found him on LinkedIn, but he uses the site to keeps abreast of who looks at his page, rather than seeking connections.

Estes is less keen to engage with “labour-intensive sites” such as Facebook and Twitter. A more urgent task is to beef up the team LinkedIn page, his own and those of two colleagues with their awards and value proposition.

“Typically, the most successful advisers work with older people. That is where the money is,” Estes says. “Most of those people aren’t taking hold of the Twitter or Facebook part of the world – yet.”