Social Media in Financial Services is Growing

Compliance and regulatory standards have distanced the financial industry from social media until recently. Social platforms are addressing the concerns about these constraints on the inherently risk-averse industry. Now, financial institutions are adopting social media as an effective tool for:

• Social selling
• Communicating with clients
• Gathering relevant news and information in real time 

Fear of utilizing these platforms is easing as employees become trained and educated in social media compliance.

The Future of Financial Services Communications

Though it may come as a surprise, there are no new rules from regulatory bodies such as FINRA and FFIEC regarding social media. Instead, existing rules have been applied to new technology. In other words: compliance-wise, don’t do anything on social media that you wouldn’t do outside of it. The mindset of the financial industry on this topic is shifting from possible concerns to potential opportunity.

LinkedIn’s Director of Financial Services, Dan Swift, discussed the adoption of social media by the financial services industry in the first part of a new interview series. He explains that employees feel protected now that the ramifications of social media in finance are more clearly understood.

Socially Savvy Sectors in Finance

Several financial industry sectors have become socially savvy on LinkedIn, with wealth management leading the way. Why is this highly regulated sector the forerunner? Swift says that it is because of the “cascade of wealth:” financial advisors can easily connect with younger generations to whom wealth moves on social platforms.

Wall Street professionals are also embracing social media. Employees of brokerage firms, for example, cannot send out messages but can still keep up with news and investor sentiment using a read only mode on Twitter. Companies can tweet new information to investors as affirmed by the SEC in 2013. Online trading has developed an important social component seen in “cashtagging” tweets about stocks (e.g. $TWTR).

The Monetary Potential of Going Social

The monetary potential of going social is huge. A report from NMIncites indicates that social media is by far the most cost effective channel for customer service. In addition, social platforms are quickly becoming the preferred medium for clients to communicate and receive support. Companies should take advantage of this online engagement.

LinkedIn’s Dan Swift noted that a large US wealth management firm gained more than $100 million of new investible assets in just 12 weeks by using LinkedIn’s Sales Navigator program. With a stronger understanding of compliance rules, the financial industry is set to benefit from social media in myriad ways. Are you taking on the social opportunity?