Finance Meets Social Media at Clear Ideas
by Harrison Ruess
The financial sector is often considered to be lagging behind other industries in its adoption of social media. This is often blamed on the intense regulation of the sector, though it remains a compelling topic, as Randy Cass explains: “this is a fascinating topic, and a topic I am yet to master, where social media interacts with such a heavily regulated industry – like financial services.”
The “Clear Ideas: Business through Social Media” event took place on March 26 at the TMX Broadcast Centre in front of an audience made up of corporate communicators, social media managers, and financial professionals. The panel discussion investigated how the financial sector and fund managers should view social media and how they can use it more effectively. The discussion was moderated by BNN’s Randy Cass.
Clear Ideas took place on the heels of a study by Accenture, released the same day, which found nearly half of U.S. financial advisors now use social media daily to interact with clients. The study also showed that advisors over-estimated their personal relationship with their clients and their client’s investment risk tolerance, making the Clear Ideas discussion extremely timely.
“Other industries are so far ahead of what we’ve been doing in financial services. We need to ask ourselves why [what they’re doing] would or wouldn’t work with the services we’re trying to provide to clients on a daily basis,” Cass continues.
The panellists at Clear Ideas represented the spectrum of experts on the subject: Shannon Ryan (CEO of non-linear creations, a digital solutions firm he founded in 1995 that focuses on large corporations), Bernice Miedzinski (President and co-founder of StarBridge Capital, a relatively new boutique investment marketing and sales firm in the hedge-fund arena), and Jennifer Smith (Partner at Sklar Wilton + Associates, a marketing research and strategy consulting firm focusing on blue chip companies).
When asked what’s different today than in the past, Smith compared today’s social media conversation to discussions from yesteryear: “back in the day CEO’s asked ‘why do we need a 1-800 number?’ Now [young marketers] say we need a Facebook page, and [again] the CEO’s ask why.”
However, Ryan suggested that nowadays the possibilities are more numerous than in the past. “The menu has expanded,” he suggests.
Ryan also explained that the digital environment is more challenging today, comparing building an online present a decade ago to a physical storefront: “build it and they will dot com,” he joked. The challenge now though is that when you build it, people won’t necessarily come. “Today you’ve got to tell people about it,” he says, concluding it is due to a drastic change in the signal to noise ratio.
Linking the social media discussion to finance, Miedzinski offers “financial services are a broad continuum – retails banks are no different from a Swiss Chalet – they have to listen to their customers, what they’re saying, if they’re upset about chequing fees, or some mutual fund performance.”
Using the example of retail banks, Smith offered that TD Canada Trust uses Twitter as a channel for customer service very well. “They have one Twitter site and six people manage it. You know who you’re speaking with, so you’ve got the face, the accountability, the one-to-one, and knowing that it’s always there. Anything you want to ask them, they will answer – or find a way.”
On the other end of the spectrum, Smith pointed out that Royal Bank had a Twitter account that appeared it hadn’t been used in three years.
As for financial advisors and fund managers, Miedzinski believes that social media offers a way not only to build relationships with clients, but also as a means of differentiating yourself from the pack. “When you think about investment funds, it’s a product and one aspect of it is performance. But when you really strip all that away, you’re looking at the expertise of the manager: you have to put a trust element into judging that person’s expertise, their professionalism and [ask if] can they deliver,” explains Miedzinski.
The entire panel however was aware of the challenges of using social media in this sector. Cass reminded everyone of the regulatory issue: “finance is off the charts – and getting worse – as for what you can and can’t do, from a regulatory point of view.”
The complication is compounded by the fact the Ontario Securities Commission (OSC) hasn’t made regulations clear. “The OSC is a year and a half, still waiting, to come up with guidelines around social media. That tells you part of the problem,” Miedzinski adds.
Additionally, many large companies significantly restrict – or ban altogether – their employee’s access to social media. Nevertheless, Miedzinski believes that finance is a people business that depends on building relationships. “People are still buying from people, so I want to know who you are as a person. It’s hard to make a distinction between the business and the personal these days,” she says.
Another way fund managers can use social media is for what Cass calls storytelling. He suggests that tools like social media can be the path for telling these stories. “We have some of the most brilliant fund managers [in Canada] that put up spectacular returns, but are sitting there at the same level that their assets have been for the last decade, because they can’t tell a story,” he laments. “I can’t recall the last time I had a fund manager on my show (BNN’s Market Sense) that talked about a Twitter feed or Facebook page.”
In seeking to explain the slow pace at which finance has adapted to social media, Smith suggests that it is a generational gap about how people view intellectual capital: “It’s your secrets – you don’t share it. You bring people in and then you share once they pay for it. But, it’s different now.”
Ryan continued that social media works following a different model than typical financial services, “You’re building an asset in a much different way, and that’s hard to get your head around.”
Ultimately a big part of what makes social media successful, and why it is a vital tool for building relationships, is its authenticity. Ryan describes the importance of genuine communication: “immediately you can tell on Facebook when [something] was written by the marketing department – and people aren’t drawn to that. They’re drawn to real conversations.”
The other major factor that makes social media – and particularly Twitter – vitally important in finance is the financial service’s consumption of information. “There is not a major news story that I have not known about at least 10 minutes before TV has reported about it, because of who I follow on Twitter,” says Cass.
He continued, “That can’t be ignored, and the traditional information sources, including portfolio managers, are going to have to wake up. The ones who are using these tools to consume information have an immense edge over those who refuse to, and the firms that refuse to allow it on their desktops.”
Clear Ideas: Business through Social Media was designed and executed by a team of six students in the Seneca College graduate Corporate Communications program: Harrison Ruess, Dayse Goncalves, Shawna Vassel, Phillip Rego, Charline Grenet, and Debra Weinryb. The presenting partner was Perennial Asset Management and the media partner was BNN.