Reputation is one of the most valuable assets companies possess, but controlling it amid the rising influence of social media is a growing challenge. Financial services personnel who naively think their company has no presence on social network sites are sadly mistaken, according to Mark Park, head of digital at MHP, a London-based public relations consultancy.
The first thing Mr Park points out to clients seeking direction on on-line strategy is that they already have an on-line presence. This is because a massive proportion of an asset manager’s staff have personal profiles on social networking sites such as LinkedIn, Twitter and Facebook on which they have identified their affiliation with their company. He knows of at least one example of unfavourable news breaking about a company that had failed to pay attention to its public profile online. Top of the Google search returns was the Facebook profile of the company chief, including plenty of references to drunken partying – a public relations nightmare.
The solution is to create company profiles that it is hoped will come higher up an world wide web search engine’s results page than the personal profiles of staff. Mr Park nonetheless would not recommend rushing into new media domains and states an asset manager should try to decide first what it wants to achieve.
Compliance is a bugbear. The UK’s Financial Services Authority is clear on the topic. In an industry update on financial promotions using new media, published in June last year, it reminded industry practitioners: “Applying the rules to financial promotions made using new media is no different to financial promotions using any other medium.” It defines a financial promotion as any communication that is an invitation or an inducement to engage in investment activity. It defines new media as social networking websites such as Facebook and Twitter, forums, blogs and iPhone applications.
In its update, the FSA stated it had identified “both good and poor practice”, noting that some firms’ “promotions” lacked risk warnings. “Firms may not have considered these factors to meet the definition of a financial promotion and therefore have not applied the relevant communication rules.”
The rise in importance of social media to the financial services industry is something several groups are trying to track. Corporate Insight, an independent financial services research group, in its October 2010 study: To ‘Friend’ is the Trend: Social Media & Financial Services Today, revisited a study performed two years earlier.
In 2008, it found that none of the mutual fund companies that Corporate Insight tracks used Twitter; by 2010, half of them were doing so – most often to post links to market commentary aiming at driving traffic to their websites.
Similarly, at the time of the first survey, no financial services company that Corporate Insight tracked had a Twitter profile to address comments from Twitter users about their firm. By 2010 it found that several leading firms, including asset managers such as Vanguard and Fidelity, were offering customer service and answering questions from Twitter users via their company profiles.
“Clearly social media is something the financial services industry is finally embracing,” stated Corporate Insight in a report overview. “While many firms still struggle with compliance concerns, and few have developed metrics for measuring their success, most of the companies we track are optimistic about this phenomenon and are willing to at least experiment here.”
Compliance issues were also found to be top of concerns in another study. American Century Investments, a US-based asset manager, recently released the Financial Professionals Social Media Adoption Study, which attracted 303 responses from advisers and brokers. The annual study, the second it has conducted, found 86 per cent of those surveyed reported having a business or personal profile account – up significantly from 73 per cent last year. However, regulatory and compliance issues was still cited by respondents as one of the biggest barriers to social media adoption.
American Century itself has a slick on-line presence. It has a Facebook site that it uses to support its promotion of a celebrity golf tournament. It has a presence on Twitter, a blog, a LinkedIn page and videos on YouTube, but this offering does not come cheap. There are six financial writers who would contribute to its blog as well as writing the more traditional reports. In addition a team of 16 people make up its “e-business” team and would be responsible for its on-line offerings. All these people are supported by an IT backup team.
Jennifer Sussman, director of on-line marketing for American Century, thinks the investment has been worthwhile. She states in-house research shows the on-line offerings have been cost-effective, particularly in terms of communicating and educating financial advisers.
Judging from prevailing trends, even if asset managers are doubtful over the use of social media as a trading tool, its value in the public relations space can’t be ignored.
source : www.ft.com
Submited at Sunday, May 8th, 2011 at 10:00 am on Uncategorized by madison
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