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Advisor success in social media white paper


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Social media is rapidly changing the way people communicate and the way consumers buy products and services. Sites like Facebook, LinkedIn and Twitter are drawing in millions of users, but what does that mean for your practice? In this white paper Mark Cohen and Victor Gaxiola explore the impact that social media can have on and advisor's practice to engage with customers to increase productivity and drive success.

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Advisor success in social media white paper

  1. 1. Advisor Success in Social Media Return on Influence and Managing Client Relationships with Social Networking
  2. 2. Advisor Success in Social Media Return on Influence and Managing Client Relationships with Social Networking By: Mark Cohen – Assistant Vice President, Digital Media, Cambridge Investment Research, Inc. and Victor Gaxiola – Social Media Strategist, Gaxiola Financial Group As an advisor, it’s impossible not to get caught up in the hype and promise surrounding social media. “Ignore it at your peril” proclaim the pundits. “Don’t do it” is the response from many compliance officers. Where are you along this continuum? Are you working in a broker-dealer environment that has enabled exploration through use of a regulatory compliant social media solution, or are you forced to sit on the sidelines? Even with a compliant solution in place, many advisors are searching for answers prior to getting started with social media. Questions abound regarding social media, ranging from assessing the value of the medium to determining how to best achieve results. And the current attention to social media is reminiscent of the early days of websites that trace back to the early digital media of the mid-1990s. In those early days of digital media, we grappled with a very similar environment. The value of websites was questioned and regulatory treatment applied existing rules to the new media – much like the experience we see today with social media. We think we can take pointers from the past experience with websites and develop a practical, compliant approach to use of social media. We think a practical approach is not only based on the classic ROI (Return On Investment) but includes a view on Return On Influence, or ROinf1 . The concept of influence as a governor of business is as old as business itself. Before the advent of “big brands” and marketing focused on engaging people with the brand, people were generally compelled to do business with the people they knew. People were brands. Personal brands were built on trust, value, and reciprocity and these personal brands were based on the strength of relationships and were highly referable. Sound familiar? Our assertion here is that the traditional relationship approach is the way you, the trusted advisor, conduct business today and reflects the manner in which you have become influential with your clients. But we believe social media offers options to be more efficient and effective in engaging directly with your clients. The concept of ROinf is not new either; however, the application to social media in connection with an advisor’s business and client engagement is new. In order to properly consider 1 The notion of Return On Influence has been around for some time and numerous views are publicly available. The authors of this thought paper are also students on the topic and have formulated their own ideas regarding Return on Influence and its application to social media.
  3. 3. influence we must first define it. It is our contention that influence is based on five factors: • Trust • Value • Engagement • Reciprocity • Advocacy Simply put, the more an advisor has of each of these five factors, the greater the odds of achieving a positive ROinf. Let’s consider each factor more fully as to what it means for you and your business: Trust – an advisor's personal brand is crucial to gaining influence. If you are reading this whitepaper, chances are that you have a strong personal brand based on trust established after numerous personal interactions. These interactions and the trust garnered from them have paved the path to influence. Today advisors also have to engender trust online as a requirement to build a viable social network. This trust stems from offline influence and will need additional care to extend it to the creation of online influence. Being genuine, establishing your credibility, and respecting the attentiveness of your audience are just some of the aspects of online trust you’ll need to consider. You also need to recognize that regardless of how long you’ve had your practice or how influential you may be, it will take time before you gain a similar level of influence in social networking mediums. We encourage you to accept social media as a “slow burn” at best. Value – your trusted brand adds value to your relationships and this is a concept that is not foreign to financial advisors. Your clients stay with you because of the value you add – you bring them your unique perspective and overall value proposition – your competitive differentiators. And although “value” may be gained differently in social media, you’ll find value goes hand in hand with trust in social networking, and perhaps is expected to an even greater degree. It is important to note the more value you are perceived to deliver in social networking, the greater the odds of increasing your social media network and expanding your competitive reach. Engagement – this is a term often discussed in social media circles. As you know, the more engaged your clients are, the more inclined they are to deepen their relationship with you. This is true in social mediums too, although in this case more care and focus is required. Why? Technology makes frequent and higher levels of engagement possible which drives higher expectations from users of social media. Social media users demand that you engage with your social network in a relevant manner that delivers value – to them. It is important this be perceived to come from an authentic voice – your voice – not a canned or corporate voice. Done well, your interactions will encourage dialogue and feedback with you from your social network connection. This level of engagement implies a meaningful time commitment, but we believe the fruits of labor for online engagement are worth the time. Reciprocity – in social psychology this often means responding to a positive action with another positive action, and likewise, a negative action draws negative responses. In terms of social media, once trust is forged then added value follows and levels of engagement expand. Your social network connections will then begin to reciprocate by making others aware of the value they find in your interactions. They won’t just read the commentary you posted on your website; they point others to it via their own social media interactions. In turn, this interest will create new connections for you and offer prospecting opportunities. Social media dramatically increases the effectiveness of your efforts as it offers a unique means for easily and quickly sharing your value proposition. This element of reciprocity does present a challenge to those of us engaged in a heavily regulated industry such as financial services. While we believe solutions are coming, we urge caution in terms of the typical application of reciprocity outside our industry – which is sharing of content by your connections to others without your engagement. Content must be considered in terms of applying existing regulatory guidelines to this new social medium. Reciprocity is also a double-edged sword. You must fully recognize the power of reciprocity in social media because negative views and bad feelings can spread like wildfire. Negative sentiment often spreads more quickly in social media than positive views, so it is critical to keep those interactions as positive as possible.
  4. 4. Speaking of positive, you’ve no doubt realized the higher the level of engagement you have with your network, the more apt it will be to serve as your advocate – which brings us to advocacy. Advocacy - with an engaged audience and reciprocity in play, your advocates will step forward. Think of these advocates as your biggest fans. Some of them will be your clients, but others may be part of your network through your clients and the positive interactions they’ve had with you in social media. In other words, prospects can also be social media advocates and help raise awareness of your business and added value – increasing the number of meaningful interactions within your social network. Together, the five factors referenced above establish an advisor’s influence. So how can you quantify ROinf and leverage it for conversion in terms of your business? In broad terms, the more meaningful your influence is on your social networking connections, the greater the size of your social network. This leads to positive ROinf but it is not the complete end game. The more positive the ROinf becomes, the greater the odds of achieving your goals for customer retention, advocacy, and ultimately, new customer acquisition. Let’s face it, just as it took several years to prove positive ROI for websites back in the 1990s, it will take time to prove returns regarding social media. There is no one size fits all ROI model for business. We like to say that “ROI is in the eyes of the beholder” in that the truest measure of ROI is that which makes sense for your business and your circumstances. Could that be straight cost of effort divided by the revenue derived from that effort? Absolutely, but if you can’t necessarily track or measure that in your practice, we believe it makes more sense to utilize metrics that you can track and measure. With these thoughts in mind, let’s again consider ROinf. The true beauty of ROinf is that it is flexible enough to consider both hard (cost) and soft (engagement) attributes to paint a picture of return. We think this will be equally relevant to the solo office with few analytical tools, as well as the super-branch that has staff dedicated to measurement. In essence, before an advisor considers measuring ROinf, we recommend defining just how you would define your influence. It may be in a detailed format relying on the model proposed here, or it could simply be broad brush strokes that compare retention and prospecting in a before and after sense with respect to social media. With all of this in mind, our suggested ROinf model follows: Trust and Value This could be tough to track, right? Since we’ve made the case that trust and value are crucial to building a social network, it stands to reason that this is where numbers of fans and followers come in. We think you could translate this into meaning the more fans and followers, then the greater levels of trust and value. So, we would propose that a net gain in fans and followers is an indication of an increase in trust and value. Engagement This may be even tougher to track than trust, particularly because engagement based on social media may occur in other channels. Regardless, we need to start somewhere, so in this case we’d propose measurement of conversions and website traffic. A conversion is an action we want our audience to take. The theory being that the more engaged the audience is, the more apt they are to take a desired action. In this case, it could be clicking a link in a post, commenting on a post, or visiting your website. Website traffic is more straightforward. You can measure increases in website traffic and know that they are coming from social media channels. Further, you can then measure the amount of time these visitors spend on your website and compare that to non-social media visitors. Additional measurements include similar comparisons regarding website paths and actions taken on your website – which may result in that person becoming a new business lead or some other conversion event. Reciprocity As indicated earlier, we’ve defined reciprocity as the sharing of content; however, this level of engagement appears to present regulatory challenges, and we look forward to software solutions that alleviate these concerns. Once this type of solution is in place metrics will be fairly straightforward in that we would then want to track the frequency of content sharing.
  5. 5. Advocacy Advocacy is the next step from reciprocity in that advocates believe in your influence and value proposition and are likely to share that belief with their social network connections. Advocacy may be the most valuable metric of all in measuring effectiveness of your social media efforts, but it may be the hardest to track. To keep things simple, we’d suggest analyzing your network to determine who the most highly engaged individuals are and then track the number of times they take some action on your behalf and multiply that by the number of connections in their network. Influence The value and trust you build forms the basis for your influence – which is likely the ultimate tool that enables you to grow your network, deepen relationships, and generate new business. Through social media you create capital in the form of meaningful interactions and in turn, these interactions increase your ROinf. About Mark H. Cohen Assistant Vice President – Digital Media, Cambridge Investment Research, Inc. Mark H. Cohen offers over 20 years experience in digital media. His career highlights begin with a decade in traditional advertising, including a role as Executive Vice President for CCM, Inc. In those early years he was active in the industry trade group, the PMA, where he was a founding member of the New York Chapter. He also taught promotion marketing, and later, the first web marketing class at NYU’s School of Continuing Education. In 1994, after co-producing the first concert broadcast on the web – The Rolling Stones live from Dallas, Texas – he co-founded one of the first interactive marketing agencies in New York, Premiere Interactive Media – which he later sold to his partner when he was recruited to become Janus Capital’s first Webmaster. Mark joined Cambridge in January 2011 following a year of engagement with the firm as a digital media consultant on behalf of the firm he founded, Colloquy Digital. About Victor Gaxiola Social Media Strategist, Gaxiola Financial Group In addition to Victor Gaxiola’s role as a Social Media Strategist for the Gaxiola Financial Group, he is the owner/Social Media Coach and spokesperson for Red 7 Marketing. He frequently participates as a commentator on social media in the financial services industry, and was recently selected to serve as an advisory board member of linkedFA, a social network for financial and insurance professionals. Victor has over 17 years of experience in sales, marketing, and project management with various companies such as Westin Hotels, United Airlines, and Wells Fargo Advisors. He is a graduate from the University of California, Los Angeles (UCLA) with a degree in interpersonal communication studies. As a financial advisor, he co-founded Gaxiola Financial Group with his wife, Kim, and increased engagement, retention, and dialogue with clients through the successful use of social media tools. Securities offered through Cambridge Investment Research, Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of AZ, CA, FL, IL, NJ, NV, OR, VA, WI. Investment Adviser Representative, Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Cambridge and the Gaxiola Financial Group are not affiliated.
  6. 6. Getting Started in Social Media Cambridge offers advisors compliant access to social media supported by in-house coaching and guidance for integrating social media into marketing strategies. Cambridge’s broad scope of solutions includes social media boot camps and one-on-one consultation for getting started, content and resource strategy, engagement tactics, and integrating social media into advisor marketing plans. Following are highlights from Cambridge’s 24-page Companion Guide “Getting Started in Social Media” which focuses on building presence, engaging others, and nurturing relationships. Audience, objectives, and resources – although more fully detailed in the Cambridge Companion Guide, Cambridge’s primer on evaluating social media platforms, begins by asking these questions: 1. Who is your audience and what social media do they use? It is important to understand which form of social media your audience uses as different social mediums appeal to different audiences based on generational preferences or other factors. 2. What are your business and marketing objectives? Each form of social media has a sweet spot and understanding that can give you insight as how you can best meet your goals. 3. What resources do you have to manage your social media efforts? Engaging your audience will take time and effort. It’s critical you fully understand the time commitment prior to making a final determination on which social media platform you intend to us. We believe these questions form the basis for a social media evaluation system that will enable you to objectively determine whether LinkedIn®, Twitter, and/or Facebook are suited to your business objectives. Define Content Strategy Another important step is to define your content strategy. Before you set up a profile, you need to understand how you are going to use the social medium, what you intend to “say” and how you are going to interact – all of which result in a content strategy. You can start to create a content strategy by addressing the following questions: • What message do I want to share? • How does my message correspond to other forms of communication (my website, marketing collateral, etc.)? • Who is going to create the content for my social media messages? • How often is my social media content going to be updated? • Does the content I intend to use require pre-approval on a compliance basis? • Has my content been approved according to regulatory guidelines? We encourage you to research the various social media platforms, such as LinkedIn, Twitter, and Facebook, and develop a foundation of knowledge so that you can best evaluate each by recognizing their distinct attributes regarding audience, objectives, and resources. We are pleased to add that Cambridge has done the heavy lifting here for its advisors and offers relevant summaries in its boot camp guide and personalized consultations. Best Practice Tips for Social Media We leave you with final thoughts on best practice tips for leveraging social media: • Develop a strategy based on: ◦◦Audience ◦◦Objectives ◦◦Resources • Focus on one social network to start • Tap into resources such as college interns • Regarding LinkedIn ◦◦Create robust profile ◦◦Actively expand connections ◦◦“Mine” the network • Regarding Twitter: ◦◦Listen, learn, and research ◦◦Connect to LinkedIn or Facebook • Regarding Facebook: ◦◦Humanize your brand ◦◦Tap into resources ◦◦Frequent postings ◦◦Timely responses ◦◦Theme reinforces value proposition ◦◦Consistently refresh content
  7. 7. About Cambridge Cambridge Investment Research, Inc, member FINRA/SIPC, is an independent, privately owned broker-dealer with about 2,000 independent registered representatives and nearly $45 billion assets under management. Cambridge offers advisors compliant access to social media supported by in-house coaching and guidance for integrating social media into marketing strategies. Recognized in the industry as The Fee Experts®2 , Cambridge provides innovative fee programs and a full menu of commission offerings to advisors across the nation. Cambridge has been ranked the fee leader among independent broker-dealers for 10 consecutive years3 and is a four-time winner in the Broker-Dealer of the Year annual poll4 . 2 THE FEE EXPERTS® is a registered mark of Cambridge Investment Research, Inc. for its investment advisory service for investment managers. 3 Financial Planning magazine, June “FP50”, Top 50 Independent Broker/ Dealer Issue, 2001-2010. 4 Investment Advisor Magazine, 2010, 2009, 2007, 2003 CONNECT WITH CAMBRIDGE Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Both are wholly-owned subsidiaries of Cambridge Investment Group, Inc. The information discussed herein is general in nature and provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Reprinted by permission for use by Cambridge. All rights reserved.
  8. 8. Selective advisors choose Cambridge. Contact us at ( at 877-688-BDOY (877-688-2369). 877-688-BDOY (877-688-2369) Cambridge Investment Research, Inc. 1776 Pleasant Plain Road Fairfield, Iowa 52556