Financial Advisors Get Social

 Raymond James Financial Advisors Get Social
Image representing LinkedIn as depicted in Cru...

Tom GroenfeldtTom Groenfeldt, Forbes Contributor

Financial advisors at Raymond James are now able to use social media tools including LinkedIn, Facebook and Twitter through the Actiance compliance tool, Socialite. Advisors also have optional access to a library or pre-approved content and tools to measure engagement.

Mike White, marketing director at the Florida-based financial services firm, said the Actiance alliance fulfills a commitment made early in the year to provide social media tools for advisors.

Financial firms have been slow to adopt social media, he said, and they have watched to see how regulators would interpret social media communications.

“In addition to incorporating the technology and archiving platform with Actiance, we have developed guidelines, training sessions and marketing and communications support to help advisors leverage social media in their client engagement and new prospecting activities,”  added White.

In the two months since the Actiance rollout, 1,200 of the firm’s 5,000 advisors have signed up. The company offers interactive video training to show advisors how social media can be used properly.

“We know there have been a lot to mis-steps [with social media] by public figures and we want out advisors and our brand to be protected in the process.”

Early adopters at Raymond James spread across all ages; the fastest to move to social media are the advisors who are most marketing oriented, White said. As the technology becomes easier to use, the age skew is not as pronounced as it once was, he added. Grandparents are among the most active users of Raymond James online services.

White thinks advisors will use social media both to stay in communication with existing clients and to prospect for new ones.

Raymond James has several people in its 200-strong compliance group who review all social media content before it goes out, with the result that approvals can usually be done the same day content is submitted. Tweets and posts go through a workflow process to provide the firm compliance oversight while allowing advisors to offer a personal touch.

“Our understanding [of the regulations] is that we do not have to review communications ahead of time, but we are being conservative.”

White said that in addition to approved canned content the company offers Tweets and posts from its economist or stock strategist.

“One great thing about Actiance is they were relatively early to the game of social media so they understand the importance of providing flexibility and insight to the communications.” The company also reviews blogs by its advisors before they are posted, a process which White said is now at the point social media was a few years ago.

“We treat blogs as ads that have to be pre-approved.”

The Aite Group, a financial research firm, entitled a recent report on social media for financial advisors “The Bloom is off the Rose.” Roughly 7 in 10 financial advisors use social media for personal purposes and half use it for business, figures which have increased since 2009, said Ron Shevlin, senior analyst with Aite Group and co-author of this report.

Use of LinkedIn has increased for business purposes and the time spent on Facebook, Twitter and blogs has declined among financial advisors. Advisors don’t spend much time on leading social media finance sites such as Stockpickr or Wikinvest; only a third of the advisors surveyed were even familiar with them.

Advisors are seeing diminishing returns from social media, according to Aite. Reaching new prospects was cited by only 19 percent, half the percentage in 2009 while increasing revenue or fees linked to social media declined from 16 percent to 6 percent.

Just six percent of advisors who don’t already use social media plan to do so over the next year. Thirty-eight percent said it wasn’t worth their time and 34 percent just don’t like to communicate with customers that way. Nearly three-quarters said their firms have policies that limit or ban the use of social media.

Vendors had some suggestions for the best ways to use social media. Actiance told Aite Group that responding to clients’ postings, such as a new child or a new job, with an appropriate messages is effective.  Echoing what White said about early adopters eMoney Advisor noted that advisors who are good at marketing are good at using social media. Financial Social Media’s recommendations suggest why some advisors are losing interest — they recommended Tweeting three to five times per day and updating LinkedIn and Facebook at least twice a day. That suggests a substantial time commitment. Other vendors of social media tools including SocialVolt, Socialware, SocMediaFin, SunGard, ThomsonReuters and Wired Advisor had a variety of suggestions about defining an approach to marketing, listening to the market and building out social networks.

Aite concluded that many financial advisors have decided that social media is not living up to its hype.

“The absence of tangible benefits from social media is muting advisors’ perception of its potential importance,” said Shevlin. Financial firms should expand their focus beyond compliance to look at effectiveness, added Aite, offering several specific suggestions for defining messages, choosing the proper platform and improving marketing skills.

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Putting finance to work

The financial sector must be transformed and serve the real economy


FINANCE is a service industry, but in the past three decades it seems to have gone its own way.

The functions of the finance sector are to protect property rights for the real sector, improve resource allocation, reduce transaction costs, help manage risks and help discipline borrowers. Financial intermediaries are agents of the real sector. Bankers were traditionally among the most trusted members of the community because they looked after other peoples’ money.

The divide between bankers and their customers (the real sector) is epitomised by a recent report which said that the mantra of a large British bank is about “increasing share of wallet of existing customers”. It recalls Woody Allen’s joke that the job of his stockbroker was to manage his money until it was all gone. And despite what bankers say, a lot more would have gone between 2007 and 2009 without massive bailouts from the public purse.

The heart of the problem is the principal-agent relationship, where trust is everything. The real sector (the principal) trusts the finance sector to manage its savings, and the banks, as agents, have a fiduciary duty to their customers. Agency business is a big public utility because the intermediary does not take risks, which are those of his customers. All this changed when the drive for short-term profits pushed banks more and more into proprietary trading for their own profits. All this was in the name of capital efficiency, a misnomer for increasing leverage.

In the past 30 years, with growth in technology and financial innovation, finance morphed from a service agent to a self-serving principal that is larger than the real sector itself. The total size of financial assets (stock market capitalisation, debt market outstanding and bank assets, excluding derivatives) has grown dramatically from 108% of global GDP in 1980 to over 400% by 2009 . If the notional value of all derivative contracts were included, finance would be roughly 16 times the size of the global real sector, as measured by GDP. The agent now dwarfs the real sector in economic and, some say, political power.

Can finance be a perpetual profit machine that makes more money than the real sector? In the US, finance’s share of total corporate profits grew from 10% in the early 1980s to 40% in 2006. Since wages and bonuses make up between 30% to 70% of financial sector costs, there are tremendous incentives to generate short-term profits at higher risks, particularly through leverage.

The key thrusts of the post-crisis reforms in the financial sector are – caps on leverage, strengthened capital and liquidity, more transparency in linking remuneration with risks, and a macro-prudential and counter-cyclical approach to systemic risks. What the current reforms have not addressed is the increasing concentration of the finance industry at the global level and increasing political power that may sow the seeds for another Too Big to Fail (TBTF) failure in the next crisis.

In 2008, the 25 largest banks in the world accounted for US$44.7 trillion in assets equivalent to 73% of global GDP and 42.7% of total global banking assets . In 1990, none of the top 25 banks had total assets larger than their “home” GDP. By 2008, there were seven , with more than half of the 25 banks having assets larger than 50% of their “home” GDP.

Post-crisis, the concentration level has increased as there were mergers with failed institutions. With this rate of growth and concentration, the largest global financial institutions simply outgrew the ability of their host nations and the global regulatory structure to underwrite and supervise them. Such concentration of wealth and power is a political issue, not a regulatory one.

Finance is not independent of the real sector, but interdependent upon the real sector. It is a pivotal amplifier of the underlying weaknesses in the real sector that led to the financial crisis over-consumption, over-leverage and bad governance. In the past 30 years, the finance sector has helped print money, encouraging its customers and itself (particularly through shadow banking) to take on more leverage in the search for yield. Instead of exercising discipline over borrowers and investors, it did not exercise discipline over its own leverage and risks.

Unfortunately, there was also supervisory failure. To bail out the financial sector from its own mistakes, advanced countries, already burdened by rising welfare expenses, have doubled their fiscal deficits to over 100% of GDP.

In spite of these trends, we should not demonise finance or blame the regulators, but examine the real structural and systemic issues facing the world and how finance should respond. The greatest opportunity for finance is the rise of the emerging markets.

An additional one billion in the working population and middle class over the next two to three decades will have more to spend and more to invest. At the same time, the world needs to address the massive stress on natural resources arising from new consumption, which is likely to be three times current levels. Ecologically, financially and politically, the present model of over-consumption funded by over-concentrated leverage is unsustainable.

Indeed, to replicate the existing unsustainable financial model in the emerging markets may invite a bigger global crisis.

Sustainable finance hinges on sustainable business and on a more inclusive, greener, sustainable environment.

Financial leaders need to address a world where consumption and investment will fundamentally change.

To arrive at a greener and more inclusive, sustainable world, there will be profound changes in lifestyles, with greener products, supply chains and distribution channels.

Social networking is changing consumer and investor feedback so that industry, including finance, will become more networked and more attuned to demographic and demand changes.

As community leaders, finance should lead that drive for a more inclusive, sustainable future.

The greatest transformation of the financial sector is less likely to be driven by regulation than by the enlightened self-interest of the financial community.

Only when trust is restored, when finance cannot thrive independently of the real sector, will we have sustainable finance.

The incentive issues are very clear. If financial engineers are paid far more than green engineers, will a green economy emerge first or asset bubbles?

Andrew Sheng is president of the Fung Global Institute.

Achieving 2011 Financial Goals

By Steve Siebold, Author — How Rich People Think

If your goal for 2011 is to improve your finances, changing the size of your wallet begins with changing how you think about money. The biggest difference between rich people and the middle class is the beliefs, thoughts and philosophies about money between the two groups. Not only are they numerous, they’re also extreme!

Fear and Scarcity vs. Freedom, Abundance and Possibility

Driven by the fear of loss and uncertainty of the future, the masses focus on how to protect and hoard their money, especially during difficult times like these. World-class thinkers understand the importance of saving and investing, but they direct their energy toward accumulating wealth through serving people and solving problems. When an economic correction occurs, the fear-based saver suffers catastrophic losses that may take years to recover. While the world-class suffer similar losses, they quickly turn their attention to financial opportunities that present themselves in a society of suddenly terrified people. While the masses are selling for short-term survival, the great ones are buying for long-term success. One group is operating from fear, the other, from abundance. Instead of clipping coupons and living frugally, reject the nickel and dime thinking of the masses. Focus your energy where it belongs: on the big money.

Logic Rather Than Emotion

Few people are able to think about money without clouding the subject with negative emotion. An ordinarily smart, well-educated and otherwise successful person can be instantly transformed into a fear-based, scarcity driven thinker whose greatest financial aspiration is to retire comfortably. The world class sees money for what it is and what it is not, through the eyes of logic. The great ones know money is a critical tool that presents options and opportunities. They also know if you’re not happy without it, you won’t be happy with it. But while money has little to do with happiness, it’s one of the most important tools in the game of life, and without the psychological chains binding them, champions earn all they can. When it comes to thinking about money, put your emotions on the shelf and let reason be your guide.

Don’t Wait for Your Ship to Come In; Build Your Own Ship

The average person subconsciously believes he’s going to be discovered, saved or made rich by an outside force in the future. The world class knows no one is coming to their rescue, and if their life is going to be uncommon in any way, it will be through their own efforts. The foundational principle they live by is self-reliance and personal responsibility. They’re not counting on the government to bail them out or their family to care for them in old age. Champions don’t wait for things to happen, they make things happen. While the masses wait around for help, the great ones go to work and fight, never counting on help or support to arrive. They know that getting rich is an inside job.

Action Mentality vs. Lottery Mentality

The masses love the lottery because deep down they believe it’s their only chance to get rich. The fact is they’re probably right. Not because they’re not capable, but because they don’t have faith in their own abilities, and their beliefs about money limit their financial success. The middle-class is self-destructive, especially when it comes to money. They will always struggle financially unless they are somehow able to break the mold cast in childhood telling them only crooks and lucky people get rich. The world class has empowering beliefs about money that leads them to effective, daily action that serves as the foundation of their financial success. The great ones know talk is cheap, and the only way to get wealthy is to take action. The truth is the middle class has all the desire they need, but they lack the beliefs to wake their desire. The cause of their inaction is not lack of desire, but lack of empowering beliefs regarding the acquisition of money.

Hard Word vs. Leverage

If hard work was the secret to financial success, every construction worker and cocktail waitress would be rich. The wealthy strategically focus their efforts on the most profitable areas of their business while leveraging their contacts, credibility, and resources to maximize the results of every action they take. World-class performers work hard, but not in the traditional sense. Hard work to the wealthy means out-thinking their competitors and leveraging the collective brainpower of their advisers. While the middle class is mentally and physically exhausted at the end of the day, the world class is fresh and excited about thinking of new solutions and ideas that will keep the middle class employed. As a result, the middle class lives paycheck to paycheck and the world class lives without limits. The only real difference lies in their approach and ability to use leverage in place of linear effort. The average person is playing life’s proverbial slot machine, while the wealthy own the slot machines.

Believe You Deserve to Be Rich

There is a persuasive belief among the masses that tells them they don’t have the right, nor are they good enough as human beings to ask, hope or pray for prosperity beyond their basic needs. Who am I, they ask themselves, to become a millionaire? Who am I to get what I really want? Who am I to live a lifestyle fit for a king? The world class asks, why not me? I’m as good as anyone else and I deserve to be rich. If I serve others by solving problems, why shouldn’t I be rewarded with a fortune? And since they have this belief, their behavior moves them toward the manifestation of their dreams. Whether they actually deserve to be rich is irrelevant. Like all beliefs, they don’t have to be true to be acted on. This is why some of the smartest people are among the poorest, while people of average intelligence build fortunes through their beliefs, positive expectations and focus.

If you want to get rich, dissect your beliefs about money and upgrade them to the world class. If you want to improve your finances in 2011 and become wealthy, it starts with your mindset. The bottom line: Think like a millionaire to become a millionaire.

Steve Siebold is author of the new book How Rich People Think, which compares 100 thoughts and beliefs about money between rich people and the middle class. Siebold is one of the world’s most noted experts in the field of mental toughness training. He’s interviewed some of the world’s richest people over the past 26 years to find out how the wealthy really see money. His mental toughness clientele includes world-class athletes, Fortune 500 companies, and entrepreneurs. Click here for more information and to download five free chapters of the book.

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What a financial planner’s credentials mean for you?

What’s in a name?

What an adviser’s credentials mean for you

By Chuck Jaffe, MarketWatch

BOSTON (MarketWatch) — Say you’re nearing retirement age, and you want to improve your portfolio to make sure it lasts a lifetime and helps meet your personal goal of putting the grandkids through college someday.

You also need to help your grown daughter as she goes through a divorce, and you have a desperate need for estate planning — as well as ongoing tax counsel — plus a needs evaluation on long-term care insurance, and you’ve heard about annuity products that could help you lock in an income stream for you and your spouse for the rest of your lives.

Getting good advice
Here are seven common mistakes you can avoid when hiring a financial adviser.
• What credentials really mean
• Glossary of credentials
• See the full special report
Theoretically, that means you are looking for a financial adviser who is a CFP, CCPS, CDP, EA, CIC, CEP, or CAS. Or perhaps you’d settle for a CPA/PFS who also holds the AEP, BCA, CDFA, CAA, CASL credentials, although there’s definitely a chance you won’t get enough advice on the grandchildren’s college savings that way.

Confused? You should be.

There are more than 100 professional designations and credentials for financial advisers, and that doesn’t count some of the flimsy, half-hearted, or just plain silly things that some advisers latch on to as a way to impress you. Every few months, there seems to be another new designation, as if consumers or the financial-services industry need them.

Advisers use financial licenses and designations to market themselves to you. Oh, they’ll say that they got the credential in order to be more qualified to handle a specific financial task or job — and there may be some truth to that — but they know that the more credentials they have, the more they can impress potential customers, and the more services they can offer their clients.

If credentials are truly important to you, and you have the needs laid out in the hypothetical above, you’d hire a Certified Financial Planner (CFP) who is also a Certified College Planning Specialist (CCPS), a Certified Divorce Planner (CDP), an Enrolled Agent (EA, for your tax needs), a Chartered Investment Counselor (CIC), a Certified Estate Planner (CEP), and a Certified Annuity Specialist (CAS).

Social Security cuts may hit 20-year-olds

President Obama’s deficit-reduction commission is proposing a slew of changes to Social Security, including benefit increases for some people. But most people in their 20s and younger today would see benefit cuts compared to what they’d get under current law, if the proposals are adopted. MarketWatch’s Andrea Coombes reports.

Or, if you went the other way, you’d have a Certified Public Accountant/Personal Financial Specialist (CPA/PFS), with a whole raft of other credentials to cover the rest of your needs.

Yet the truth is that an ordinary financial planner with a customer base that is mostly people of your age and assets and concerns could probably do the job, without having a single advanced credential. You may feel more comfortable with someone who has additional training to meet your needs, but you can also overvalue that additional training and pick an adviser more on his or her credentials than his or her true worth as a counselor.

Don’t sell experience short and give too much credit to letters after the adviser’s name. Some titles and designations have valuable significance; but others are misleading, or worse. As a consumer, you should know that titles and credentials can misrepresent an adviser’s ability to give you appropriate, knowledgeable advice.

Credential confusion can leave consumers vulnerable to unsuitable recommendations and costly investments; state and federal regulators have reported a huge increase in deceptive practice cases, particularly involving senior citizens, who swallow the alphabet soup as if it’s truly meaningful. They believe that advisers with a credential that makes them some type of expert on the finances of senior citizens makes for the perfect helper; however, it may also open the door to rogues and scoundrels. As a result, some states have implemented new regulations that limit the use or mention of credentials by certain types of advisers.

Even if you know what a CFP is, you probably don’t know what an adviser does to earn the designation. And CFP is a common credential, unlike most of the 100-plus designations that most consumers have never heard of.

In general, legitimate credentials prove that an adviser is furthering his or her education; with the rules and regulations of finance changing nearly every day, current information and knowledge is crucial.

Simply having credentials doesn’t make someone worthy of being your adviser.

Instead, think of credentials as a starting point and not the Good Housekeeping Seal of Approval.

All of these letters are supposed to be “professional designations,” which is a misnomer because–with the exception of lawyers–none of the members of your financial team truly is a “professional.”

Most dictionaries define “profession” as a vocation or occupation that requires advanced training either in sciences or the liberal arts. You do not need an advanced degree to practice as a financial planner, insurance agent, real estate agent, stockbroker, tax preparer, or accountant. Standards vary for each role, with state or federal law dictating whether practitioners must even be registered or licensed. Even then, “registration” is more about putting your name on file than it is about having achieved a minimum standard of education and academic excellence.

In other words, you can be a “financial planner” without having the “Certified Financial Planner,” “Personal Financial Specialist,” or any credential. That doesn’t demean the designations; there’s no denying that an adviser who goes through training and education to get them is set up to be a better, more skilled, more competent adviser.

Moreover, there are a number of cases where the governing bodies that designate the criteria for a particular standard are warring with competing organizations touting a different standard. For example, an adviser looking to become more knowledgeable on the use of mutual funds could pursue the Chartered Mutual Fund Counselor (CMFC) designation, or the Certified Fund Specialist (CFS) standard. Or she could decide that the continuing education she gets on mutual funds just from being a Certified Financial Planner is sufficient. Truth be told, if you took three advisers, and each took one of the paths described here, you’d have a hard time telling the difference.

That’s precisely why your decision will come down to more personal factors and be less about credentials.

It’s important to make sure that an adviser’s designations are meaningful to you and your needs, because you will almost certainly be paying up for the expertise and credibility these marks bestow on an adviser.

It’s impressive when you find a financial planner who has done the work to earn the “Chartered Financial Analyst” designation; the CFA is one of the most demanding and respected marks in the business, and it is held primarily by stock analysts and institutional money managers. A financial planner who gets one will tell you that it makes him better at selecting stocks and mutual funds.

That may all be true, but if you just want a basic mutual fund portfolio, the CFA means that the planner is way overqualified for the job. There’s nothing wrong for that, unless you are paying the freight for all of this expertise that you aren’t using and don’t expect to need. In that case, someone with less invested in getting credentials can provide qualified assistance at a lower cost.

Professional marks are nice, but there is no substitute for the experience of someone who has a client base just like you, where instead of trying to be all things to all clients, she specializes in the needs of a small group of like-minded, financially homogenous people.

Four questions to ask

When an adviser makes his or her credentials part of the presentation — a presumed reason why you would want to hire him or her — ask these four questions:

What did you have to do to earn this mark, and why did you consider it important to achieve this distinction?

Some credentials require experience, knowledge, continuing education, and the ability to pass a test, while others are online open-book study. Some advisers use their membership in a trade group, like the Financial Planning Association, as if it was a meaningful credential. Maintaining certain designations requires adhering to an ethics policy; other times, all that’s necessary to remain in good standing is to pay dues. And some marks seem to be little more than a show.

Find out why the adviser went to the effort of getting the credential. You may learn a lot about the adviser’s experience and clientele that way; if he pursued an annuity designation or estate-planning credential because clients were aging and asking about those specialties, you’ll get a better idea of whether you fit in with the adviser’s “typical client.”

Are there continuing education requirements? If so, what must you do to meet them?

Ask about the courses your prospective adviser must take to stay current, and ask how that education might help him work with you. Continuing education courses run the gamut from nuts-and-bolts practice-management classes to specific ideas for helping clients get more from their money.

You want an adviser who is building expertise as it relates to you (rather than learning how to get more profits from each client, which some organizations consider suitable continuing education).

Can you give me the contacts for the sanctioning body?

No adviser should be afraid of your contacting the group that issues the credentials to make sure everything is on the up-and-up. While you can get the contact details on your own, play dumb here because you want to see if the adviser will make it easy for you.

Most consumers don’t do their homework and make appropriate background checks, which has allowed crooks who pretend to have credentials to stay in business. In addition, most sanctioning groups will kick out members who run afoul of bylaws or codes of ethics, so someone who has a credential up on his office wall may not necessarily be entitled to continue using it.

An adviser who really works with the sanctioning group will have the phone number or Web address handy and should have no fear of your checking out the credential.

Does the designation mean anything unique in the service?

With tax preparers, for example, an enrolled agent can represent you in an audit; the return-preparer at the corner fast-food tax joint can’t.

An accountant who also has a law degree, meanwhile, may be adept at trust and estate planning work. The same could be said for a financial planner with a law degree. Plenty of advisers use credentials to cross over from one specialty to the next, which is good if your financial needs spill from one area to the next.

Assume that the letters after an adviser’s name mean something in terms of the price you will pay, as in “the more credentials, the bigger the bill.” That’s not always true, but that kind of thinking will help you find someone who is “properly qualified” to work with you, rather than being over- or underqualified.

Don’t pay for expertise you don’t need. You may decide you don’t need a certified public accountant to do an ordinary tax return, for example. At the same time, you might prefer hiring a lawyer who has taken specialized classes in elder law.

By making the adviser spell out the benefits you get from his expertise, you go a long way toward defining what to expect from the relationship.

Excerpted with permission of the publisher John Wiley & Sons, Inc. from “Getting Started in Finding a Financial Advisor” by Chuck Jaffe. Copyright (c) 2010 by Chuck Jaffe.

Chuck Jaffe is a senior MarketWatch columnist. His work appears in many U.S. newspapers.

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