Asset Manager Adoption Of Social Media, 1 Year Later

Today is the one-year anniversary of FINRA’s release of Regulatory Notice 10-06 Guidance on Blogs and Social Networking Web Sites, and I’ll be short and to the point in summarizing our view of the asset management industry’s adoption of social media.

Adoption is proceeding at a snail’s pace but it is underway. And, I’m surprised by the number of mutual fund companies (although far short of the majority) that are committed to trying something. Providers of exchange-traded funds (ETFs), where are you? For more on what we're expecting in 2011, please see my 2010 New Year’s Eve post on

But don’t go anywhere just yet. What follows are observations on asset managers’ embrace of social media from the enablers, the providers of social media archiving solutions.

In releasing its guidelines a year ago, FINRA elaborated on the significant recordkeeping requirements but then made the following statement:

“Of course, it is up to each firm to determine whether any particular technology, system or program provides the retention and retrieval functions necessary to comply with the books and records rules. FINRA does not endorse any particular technology necessary to keep such records, nor is it certain that adequate technology currently exists.”

The only practical way for an asset manager to conceive of exploring social media would be to expect to rely on a technology-based means of retention and retrieval, of course. Over the 12 months that followed, the leading providers stepped up with extensive efforts to educate the industry that would need to learn before it could buy. The archivers provided much of the education and helped shape the discussion even as they were developing and refining their products. SocialTurns, the community site created by Socialware, is an initiative especially worth noting.

What can these firms tell us about where asset managers are with social media? We asked Actiance (as of this morning, the new name for FaceTime), Arkovi, Smarsh and Socialware five questions. Thanks to them for their thoughtful responses.

  • In general, how would you characterize the asset management industry’s social media progress? Do the leaders have any traits in common? Similarly, are there traits shared by the firms that have been slower to consider?
  • Are there some early challenges or hurdles that have been fully addressed—in other words, have early adopters and early experience figured some things out for firms that follow?
  • What continue to be the most significant challenges?
  • What are your smartest, most innovative clients asking you for now?
  • What benefits have you seen your clients reap as a result of their social media participation?

In general, how would you characterize the asset management industry’s social media progress? Do the leaders have any traits in common? Similarly, are there traits shared by the firms that have been slower to consider?

SARAH CARTER, ACTIANCE: We’ve seen an increased take-up of social media and are increasingly seeing new roles being created—from specific VPs of Social Media to cross-organization working committees looking at both the benefits of social media and also how the requirements of compliance can be met.

Social networks have been accepted as standard tools for many asset management companies, particularly as vehicles for communication, marketing and sales to better build communities around their brands.

The traits that the leaders often display include a deep understanding of the benefits of social media channels, coupled with knowledge of the challenges as well. Leaders are vocal, publicly, about their success and their less than successful forays, and share their best practices, share their implementation tales and seek advice from peers.

For the organizations that have been slower to adopt social media, the primary reason is that they continue to be wary about the pitfalls of social media and overwhelmingly cite concern about potential compliance, security and e-Discovery issues as their main reasons for avoiding social media and Web 2.0 tools. These organizations have been slow to investigate policies or other tools to help with the process.

BLANE WARRENE, ARKOVI:2010 was a year of listening and observation for asset managers—first monitoring momentum and looking for success stories and validation that what could have been a trend was becoming a legitimate communications channel.

Second, the larger any organization the more cautious they are to "dip their toes in the water.” This is in conjunction with investing time in two areas of research and review:

  • Legal, which involved looking at what clear definitions that emerged from regulators on social media and then fine-tuning what they believed was the most accurate interpretation of those guidelines for the culture in their organization.
  • Strategic planning, which involved taking the time to think through goals/vision, which in turn led to guidelines and policy, resulting in a clearer view of tactics and responsibilities for engaging in social media.

This takes time and, as we have seen, organizations have sorted at least some of this out. Examples include Schwab, Vanguard, Fidelity, Lord Abbett and others that have begun to promote their social presence on at least some networks (Twitter, blogs, Facebook et al).

CHAD BOCKIUS, SOCIALWARE:Leaders are using social media channels to achieve broader distribution of portfolio manager quarterly updates, as well as distribution of their letters to shareholders. Some fund families use social media to promote other discussion forums such as blogs as a mechanism to integrate their entire digital strategy.

Are there some early challenges or hurdles that have been fully addressed—in other words, have early adopters and early experience figured some things out for firms that follow?

ACTIANCE: Given the ever-evolving nature of social media, the hurdles and challenges faced by companies can change every day. Possibly the largest hurdle we’ve seen is the ROI—where organizations, when putting a toe in the water, worry about the investment and the returns that they’ll get. No one, it seems, wants to be a trailblazer and potentially get burnt in the process, but equally, no one wants to be last and left behind.

Early adopters have interpreted the regulatory guidelines and trodden carefully, implanted in small focus groups and stepped around the potential for compliance regulation violation. However, the organizations that have investigated policies and implemented some form of them are much more prepared to address the changing features provided through social networks and can identify solutions that keep the firm within compliance. The organizations that are experiencing the most success with monitoring these channels are deploying technology solutions to help monitor and track the changes, creating a safety net for the firm.

ARKOVI: More than the legal and strategic planning, some of the hurdles have been:

  • What tools to use for content production and distribution and how to identify, assign and manage teams who will use those tools.
  • How to comply with the legal decisions affirmed within those organizations—thus, tools like Arkovi that will automate and streamline their archiving, monitoring and business intelligence needs.

There remains room for clarity here as this segment of the industry is in varying stages of planning, adoption and implementation.

ADAM BULLOCK, SMARSH: Many individuals charged with implementing and enforcing a reasonably designed social media policy for their firms have a very similar hurdle to overcome: they’re not the ones at the firm using social networking Websites. Firms needs to lean on their internal experts (who might be from a younger generation or not in positions of leadership) or their partners/vendors to really understand how social media can benefit their firm.

SOCIALWARE:Yes. If you refer to the series that LIMRA and Socialware produced on the Social Media Adoption Life Cycle you will see an aggregation of the best practices firms have figured out as part of leading the charge into social. Each step has an associated 30-minute Webinar that gives even more detail.

What continue to be the most significant challenges?

ACTIANCE: The constantly changing landscape continues to pose a challenge. We track the growth of social media—not just in the 1,000 social networks that we’re able to control but specifically looking at the features across Facebook, LinkedIn and Twitter. In the second week of January 2011, Facebook made 12 major feature changes that could have led to significant compliance and security breaches if left unchecked. In addition to the changing feature sets, technology support can change as well.

Tracking consumer behavior continues to be a major challenge. LinkedIn is the tool of choice in a B2B environment but look, too, to the meteoric rise of Quora, which seems to have snuck up upon us almost without warning. Facebook might be the choice du jour today, but what about next week? Tracking the changing behavior of the ever fickle consumer will continue to task the savvy social media user.

These changes, both in features sets within our well known social networks and then the addition of new social networks, taxes the compliance requirements. This Web 2.0 world that gives us all these ways of communicating and collaborating is different from our Web 1.0 world—it’s a world of no standards, where enabling connection is key—so applications use any which way to connect and as such are hard to control. Traditional compliance and security controls don’t cut the mustard in this space.

ARKOVI: Grasping the larger vision of how social media fits as a component into any digital and offline strategy as a complement to and extension of the brand. It is more than just repeating what you say in the non-social media world. Helping firms cultivate the vision for true management and monitoring of social media content (their own and others’) and how to leverage that to drive consideration of future initiatives is a key requirement to continue to develop.

SMARSH: This past year, I’ve noticed that companies and individuals in the financial industry have continued to shift toward recognizing the business potential of social media. Even with FINRA Regulatory Notice 10-06 providing some guidance, there still seems to be some confusion pertaining to certain actions on the “big three” (LinkedIn, Facebook and Twitter) social networking Websites. Examiners are getting savvier, and validating a company’s presence on any social media Website can be done in mere seconds.

SOCIALWARE:Compliance is still viewed as the number one challenge. Obviously technology solves a key part of this problem but the policies, procedures and training that must wrap the technology continues to be a gap that needs to be filled. We’ve tried to help firms with Socialware Insights and SocialTurns but at the end of the day firms still need to do the work. It will be a process, not an event.

What are your smartest, most innovative clients asking you for now?


ACTIANCE: The smartest clients are looking ahead, moving on from social media being the domain of the marketing team, anticipating how their employees and the organization as a whole can benefit from social networks, and working with us proactively to use a variety of Web 2.0 platforms. They are looking for compliance solutions for Facebook, LinkedIn, YouTube, Twitter and thousands of other social networks and real time communications platforms. Our clients realize that compliance and security are achieved through active monitoring and education across all platforms, and are not solely focusing on Facebook.

ARKOVI:How do we filter the vast amount of data (our own and others’) down to what is relevant to us? That remains a significant advantage of Arkovi for our clients—our ability to resolve compliance and archiving needs and then start doing the research for teams. The analysis produced by tracking keywords and phrases across Web and social properties and seeing it in context against the asset manager’s own content is revealing to marketing and business development staff.

SMARSH: I think companies are starting to understand that simply prohibiting social media isn’t cutting it. With that said, compliance departments need a robust, flexible solution that allows them to electronically enforce whatever social media policy they have in place.

SOCIALWARE:The smartest clients are asking us about expanding and integrating the use of social media across the different departments inside their organizations. For example; expanding the use of social media across analysts, portfolio managers and institutional relationship sales teams. New York Life, for example, has been very upfront about their desire to roll out social media access to all 40,000 employees. There is a Baseline magazine article where they discuss this—you can read more about it on our blog.

What benefits have you seen your clients reap as a result of their social media participation?

ACTIANCE: There are many benefits of social media and Web 2.0 use, including:

  • Increased customer loyalty as the result of more efficient customer service via social media
  • Better visibility into all communications tools on the corporate network and better control over usage
  • Increased lead generation and better communication—allowing firms to thrive in the new technology age
  • The openness of the social marketer has produced increased coverage. Here are two financial services, although not asset manager, examples: That Bank of America utilizes Twitter to notify customers of Website issues is in itself a new story. That @Citi social media leader Frank Eliason is so vocal about how he’s transformed social media at the financial services behemoth generates pages and pages of positive coverage.

ARKOVI: Three areas:

  • New introductions in the areas of prospecting, which have led to new business and measurable revenue.
  • Discovery and cultivation of new centers of influence.
  • Having a clear repository for all things digital about their brand, again not just of the asset manager’s own content but from content across the Web and social spectrum through saved searches. They have in turn used this to drive the focus of their own content and marketing.

SMARSH: The risks of corporate social media use are very real, and we expect regulatory enforcement to increase in 2011. With a reasonably designed policy and an enforcement solution, firms are finding social networking to provide new and exciting avenues into new business. If you can get your name out there and garner some clout in the social media space, you’re seen as a thought leader in your area of expertise. Social media works great for both communication with your current client base as well as the ability to attract potential customers.

SOCIALWARE:We’ve seen a variety of benefits. Facebook and Twitter offer expanded interaction with their customer helping to create deeper client relationships while also building the individuals’ brand, which will help with leads and sales.

LinkedIn obviously offers tremendous recruiting benefits. An example from the advisory business is the decision of a Wells Fargo advisorto go to an independent broker dealer (Cambridge Investment Research, a client) because of Cambridge's support of social. There is no doubt the support of social will be a recruiting weapon in 2011.