Financial services slowly, cautiously embrace social media

While many companies are embracing social media marketing, the financial services industry has been more cautious. Because they operate in an intense regulatory environment, many banks, brokerages, insurance companies and wealth management firms are gun-shy about engaging on social networks, and some ban social activity by employees entirely.

But others are stepping into the social maze, cautiously but deliberately.

“We're looking at ways to ramp up our b2b outreach,” said Donna MacFarland, senior VP and CMO-retirement plan services at Lincoln Financial Group, which last year introduced a Facebook Forum to help client companies learn about retirement and savings issues for their employees.

“Some will need custom solutions for their particular employee populations,” MacFarland said, “and we'll often leverage our client relationships to make sure we're posting on their Facebook pages as well.”

“In 2008, most were just starting to get a handle that this was out there,” said Alan Maginn, senior analyst at Corporate Insight, which provides research and analysis to the financial services industry, at last month's Social Media in Wealth Management Leadership Forum sponsored by the Business Development Institute in New York. “The ones that were smart were at least claiming their names.”

In 2008, 45% of brokerages had a Facebook presence; today, 80% are on Facebook, Maginn said. Bank and credit card-issuer involvement on Facebook has gone from 56% to 82% in that time frame, and annuity companies' participation has jumped from 17% to 79%.

“LinkedIn has become a prime prospecting area for financial advisers,” Maginn said. “Also, it doesn't require the constant, thoughtful updates that Facebook or Twitter require.”

But risks remain for financial services companies engaging in social media. Data leakage—in which personal or business information such as credit card data is released inadvertently on social networks—is one danger.

“And then there is compliance and discovery,” said Joanna Belbey, social media and compliance specialist at Actiance Inc., a social marketing technology company that focuses on financial services companies. “There are more than 10,000 rules and regulations in the U.S. alone that a company needs to think about,” she said. Belbey warned in particular about financial advisers making investment recommendations via social platforms, which would violate many laws.

Asset management company MFS Investment Management is one financial services business moving forward in the social space, which, said Jennifer Dowd, MFS communications associate, has been an evolution at the company.

“In 2008 we brought in interns, gave them cubes and had them engage in social to see if our clients were in the space,” Dowd said. “We learned that they were, so we decided to move forward to build a social foundation.”

Dowd said MFS' marketing department spearheaded the initiative, but with participation by its legal and compliance units. MFS started with podcasts, YouTube videos and white papers; then it launched both an internal blog for salespeople and an external, client-facing one.

“Today, we always think about social when building a campaign,” Dowd said. “Building a strong foundation seems daunting but, once you do build it, it will help you grow, and grow up.”