Executive Summary
The explosion of social media as a means of communication has been stunning. And while those in professional services are just trying to keep up with the change, today's younger generation (and frankly, more "older" people that you might suspect) has already fully embraced the change. What this means, though, is that social media is not just about some new way to do marketing and develop new clients. Instead, it means that financial services needs to figure out how to handle social media - and fast - to even remain relevant and appealing to the future generation of financial planners themselves!
The inspiration for today's blog post comes from some recent conversations I've been having with young financial planners about social media, along with a great book I just finished called Socialnomics: How Social Media Transforms the Way We Live and Do Business by Erik Qualman. In the book - and a related Socialnomics video, as shown below - Qualman makes a compelling point that social media is not just a short-term fad. It represents a new medium of communication (not to mention a new way of doing business). For instance, between the impact of social media and the fact that young people create a "digital identity" of their own early in life, some colleges and universities aren't even providing email accounts for their students anymore; at best, they simply provide a college forwarding address to the student's own email, if that.
The video highlights the social media revolution that's underway. And the problem is that our industry's current approach - to clamp down on social media from a compliance perspective, with only a few firms like Securities America as a social media exception - risks completely alienating the entire generation of young people currently entering financial planning.
Think about it. Colleges not even issuing email accounts anymore. Facebook having twice as many accounts globally as the entire population of the US (and there are estimates that well over 50% of the entire US population has a Facebook account now; even yours truly!). To tell a young person to enter financial services and start working with clients and developing new ones without using social media is like telling Gen X to build a financial planning business without email, or telling a baby boomer to build a financial planning business without using the telephone. We're not just talking about some cool new advertising mechanism here; we're talking about an entirely new way of using technology to communicate.
No, that doesn't mean that telephone and email will go the way of the dodo bird. For instance, the rise of email didn't completely eliminate the use of telephones, and the rise of email and telephones didn't eliminate a desire for face-to-face meetings or even the occasional use of a hand-written letter. But new technology does replace old; who would have thought so many households would completely get rid of landlines, in lieu of cell phones and internet-based calling services like Skype? In any event, all of these various communication mediums - telephone, cell phone, email - do support the client relationship and the business development process and become part of the larger pie. So too will social media play a role, and become a part of the communication process.
In fact, the video makes the case that point has already arrived. The question as Qualman puts it is not whether we do social media, but how well we do it. The industry's current approach - effectively, to either ban it completely, or allow it is a marketing distribution tool but forbid its use for engaging in actual communication with clients and prospects as Morgan Stanley has done - makes us appear like we're stuck in the stone ages. Simply put, when we tell young people to build a financial planning business without using social media, it sounds like we're telling them to build a business using a chisel and stone tablets. The long-term viability of the industry absolutely depends on us figuring out how to adapt to the rapid change in technology-driven communication tools, or we come across as functioning in the stone ages to young people, who will simply walk away and find a less paleolithic profession to engage in... heck, even paleontology has a Facebook fan page!
So what do you think? Is the social media revolution for real? Are we making financial planning as a profession less relevant to young people with our compliance crackdown on social media tools? Is this also going to adversely impact our ability to develop Generation Y as clients and be relevant to them in the future, if we don't figure out how to solve the social media challenge?
Wow, I am surprised colleges don’t issue email accounts. What do they use instead? Texting? Facebook? This fact drives home the point that the next generation will be frustrated by the lack of access to social media.
Susan,
I think it’s a blend. Some is texting and Facebook. I think some universities will at least set up a ghost auto-forwarding email address but no actual account, so the student can interface from their own gmail/yahoo/hotmail/whatever account.
I know a few planners who teach financial planning for college students who have repeatedly said to me that the students definitely think email is already “old school”!
– Michael
To bolster Michael’s point, my 17 year old sees his email account as an attic for site registrations and spam and never looks at it. The only way to reach him electronically is facebook messaging and texting.
Beware of fads. I remember the tech bubble of 2000 and now the same thing is happening. I doubt that Social Media will bring in clients, although it could boost Google SEO.
Regarding setting up a Social Media account for a Broker-Dealer that could be a challenge for them that causes the most productive Reps to quit and become fee-only RIA’s where they would have more freedom to blog and Tweet.
Don,
There was a tech bubble and a .com bubble in 2000 and it popped… nonetheless, we now utilize email radically more than we did 10 years ago, and conduct hundreds of billions of dollars in online business that didn’t exist 1-2 decades ago!
Just because there’s a bubble that pops, doesn’t mean there isn’t an underlying meaningful trend underway.
Respectfully,
– Michael
My Millenial and Gen Y children will not give up their iPhones and Androids for something more “retro”. There’s no going back. I need to embrace the world they are living in to continue to be part of it, so my bookshelf holds how-to manuals for Google, Android, Twitter,and Facebook. It only makes sense that a business that wants to remain viable into the future should do the same.
I don’t think there is any question that communication is changing, and doing so rapidly. Even for myself (and I squarely straddle the Gen X/Y line), don’t try reaching me by calling once I’m outside the office. I cannot recall the last time I answered my phone at home…or even had the ringer on! Text, tweet, Facebook IM, even email…but don’t call.
As a planner, I’ve almost fully dived into the social media space. I do wonder – and I am very guilty of this – why we continue to spend so much time on making powerful and impactful websites while completely neglecting our Facebook pages. I have not even seen much written about this.
Facebook and other social pages are, in my opinion, quickly becoming as important as a website. In fact, a Facebook page allows you to touch those who “Like” your page regularly and in a way conventional websites can’t. People have even given you permission to do so.
I’m guilty of using my Facebook page as nothing more than a place to syndicate my blog posts. There’s so much more to do on Facebook – create custom landing pages, run highly targeted advertisements, publish share-worthy content, engage people using Facebook questions, like other fan pages, and on and on…
In fact, I think I’ll go put a little more time into my Facebook pages right now!
Michael, this was excellent. You have identified one of the most important things that will need to change if the financial services industry wishes to maintain its prominence going forward. I will be sharing this with a lot of people over the coming few months.
I went to the gym tonight and I watched “Burn Notice” on USA network. It was about 50% commercials and they had tweeting right in the middle of the screen durring the show. Not at the bottom, but across the middle. I didn’t read one of the tweets. It was generally a bad experience, having watched TV.
Sorry, guys, this is not for me.
Joseph,
That sounds like a bug of some sort. I’ve never seen, or even heard, of a show putting text across the middle of the screen. That’s not what we’re talking about here. 🙂
– Michael
Bravo Michael. Baby boomer are the last generation to know a world where people live in the same place and know the same people for an entire lifetime and learn an occupation once. That is where we come from but not where we are going. Change is here to stay and we better get used to it. Social media IS revoltionary and has advantages and pitfalls. Those who stand on the sidelines waiting for the perfect time or “enough” knowledge to get started will be left behind. It is times like this where I truly value my independent status. I may mis-step along the way but I’m moving forward anyway.