Asset Managers And Social Media, Circa May 2010

WASHINGTON (5/7/2010)—Three sessions at the Investment Company Institute General Membership Meeting and Operations and Technology Conference provided a tidy snapshot of the asset management industry’s position on social media.

Better blog-writing and SEO would argue in favor of publishing shorter single-theme posts over several days, but we think you might benefit by considering this all together, including a bonus feature on recent investor research.

Asset Management Industry Leadership

This heavy-hitter panel moderated by Vanguard Chairman, President and CEO F. William McNabb included Hartford Life President and COO John Walters, First Eagle Investment Management President and CEO Bridget Macaskill and Franklin Resources, Inc. President and CEO Greg Johnson discussing financial reform, active management and…social media? Yes, in a question from left field in a ballpark down the street, McNabb polled the panel about social media.

Paraphrased responses:

  • Walters: “I don’t get it, I don’t know how it drives the business.” (The Hartford does have a Twitter account, but we leave room for the possibility that the account has objectives other than directly driving the business.)
  • Macaskill: “I don’t get it either.” But Macaskill acknowledged that social media may be something a younger generation insists on.
  • McNabb: “We’re a virtual company and we’ve seen how word-of-mouth can move information so much more quickly. Social media is something we have to be thinking about pretty hard as an industry.”
  • Johnson: “We’re interested and have a few pilots underway.”

Investment Product Distribution Leadership

A few hours later, executives from the top distributors Bank of America Merrill Lynch, LPL Financial, Fidelity Investments Institutional, Morgan Stanley Smith Barney and Edward Jones were assembled for a panel to discuss heavy topics such as the future of advice, regulation, outsourced investment management…and social media.

Paraphrased responses: 

  • From LPL Financial Chairman and CEO Mark Casady: “We see Facebook and LinkedIn as critically important to advisors and you [asset managers] need to help us with what content can be shared. If you're not preparing for that, the world will pass you by.”
  • From Morgan Stanley Smith Barney Managing Director and Head of Wealth Management Andy Saperstein: “Social media is here to stay... ..It will change how we (advisors) do business.”
  • From Fidelity Investments Institutional Services Company Peter Cieszko: We’ve already committed to mobile applications, Facebook, Twitter, LinkedIn.

Although not mentioned during the panel, during the March 17 FINRA Webinar on implementing best social media compliance practices, a Bank of America Merrill Lynch representative said that the firm was working on a social media pilot.

It’s ironic that as this discussion was taking place Thursday afternoon, financial advisors were struggling to interpret the market’s plunge for their clients. According to an InvestmentNews poll Friday, half of surveyed advisors were contacted by their clients and 60% reached out. A look at the stream on Thursday provided added insight to how Twitter-using advisors were trying to piece together the facts in real-time.

It was an exceptional situation but is it one that asset managers helped out with or might have? We posed the question to advisors on our blog.

How Asset Managers Are Using Social Media And Why

Ah, the third session was one we were expecting social media to be discussed in! This panel, which I’d been invited to moderate, included:

  • Amy Dobra, principal at Vanguard and head of the Retail Client Experience Group
  • Sheryl Larson, Vice President and Online Marketing Manager at Northern Trust
  • Lawrence P. Stadulis, partner in the Investment Management Department at the law firm of Stradley Ronon

My impression (your impressions are welcome below) was that it was 75 minutes of encouragement. Dobra and Larson represent firms with very different heritages—Vanguard, the self-directed investor and Northern Trust, the private bank. And yet, both organizations see reason to explore the potential of social media.

Dobra described Vanguard’s adoption of social media as an evolutionary response to “how clients want to connect.” In 2004-2005, social features (e.g., article ratings) were introduced to The blog and a Facebook presence followed two years later.

Vanguard uses Facebook to discuss savings and retirement issues, never product. The blog is authored by five senior leaders across Vanguard who write about whatever is timely and relevant.

“Social media is a good fit for Northern Trust because it’s about relationship-building,” Larson said. “It’s one of our cornerstones. Everything we do is for the client. If clients or prospects are having conversations about topics, we want to be a part of that and offer our expertise or understand the pain points.”

Larson and her team spent the last year learning, planning and building a framework that could support the business units. Experience with a Northern Trust Open Twitter account and Facebook page also gave them confidence and experience.

On Friday, as supported by Larson’s corporate Online Marketing team, the Northern Trust asset management business Northern Trust Investments launched @Fixedology. The Twitter account aims to extend the “conversations” about fixed-income that have previously been taking place via a series of e-books.

The following are selected highlights of what the panel discussed. For more, watch the video on the ICI site. And for even more, but in shorter form, see the Twitter #iciconf hashtag, which featured multiple tweets from people who attended the session.


Social media could have the same impact as having a Web site did—driving efficient asset growth. (Dobra)

It’s less about building content and trying to drive traffic to our Web sites and more about going to sites where people are having the conversations. (Larson)


We are excited about it, we’re having fun and we want to encourage everybody to get started. But, it can backfire. You need to have a deliberate plan. You need to know the rules of engagement. If you do something that’s inauthentic, don’t use the right tone, if you’re not conversational enough, you run the risk of disenfranchising. (Dobra)

Go into it with eyes wide open. The software, the policies, procedures, the ability to do it at scale—everything is not all in place yet. (Dobra)

There’s the risk of launching something without the ability to support it. It’s not a project, it’s a commitment to a new channel. It requires a plan. (Larson)

You can start out conservative and then get a little more comfortable. It can change over time. But you need to start with something. Know that many other firms are going to be giving their registered reps more access. (Dobra)


We don’t have SEC guidance yet. (Stadulis)

The compliance risk depends upon the entity. Most of these activities will be done through the distributors. Issues identified by Stadulis include:

  • The biggest issue is probably record-keeping and technology. Technology is an evolving area, some have and some don’t.
  • Firms need to walk the line and avoid making recommendations that trigger suitability requirements.
  • Many firms today are working on understanding what’s interactive content and what’s static content. Approval and filing rules are the differences between the two.
  • In supervision, the two concerns are the intersection of business and personal and the reference to third-party content. Employees want to talk about their jobs, and once they do they trigger supervision. FINRA says you’re allowed to say that you work for X firm but at what point do you trigger supervision? In social media it’s difficult to know when the workday begins and ends.

“None of these are insurmountable and can be addressed by policies and procedures and supervision.” (Stadulis)

Different social media raise different compliance risks. LinkedIn is a tough one, it’s tough to monitor conversations. (Stadulis)


We need to prove this out before full-time staff is added. We’re shifting the focus, away from the Web site. (Larson)

Many people think they can hire interns or college grads. You can’t sustain your program with that approach. You need people who yes, get social media but also get your business and have good judgment. Good judgment piece is key. (Dobra)


We started out saying let’s just date these providers. We don’t want to enter into a five-year contract because we don’t know what we don’t know. (Dobra)

Vanguard IT likes proprietary software solutions, but that’s difficult in the social media space. If you want to be nimble and quick, you have to use some tools that involve giving up control for what we gain in flexibility. (Dobra)

We’re using a tool to monitor the brand and key thought leaders. (Larson and Dobra)

We’ve added the capability in our site analytics to track social media campaigns and site traffic generated. (Larson)


Numbers won’t justify your spend at first. Take a long term perspective when looking at ROI. There was a period of time a period of time when the Web site may have increased costs because phone center staff had to answer questions about the Web, too. But look at its cost-savings impact over 10 years. (Dobra)

Bonus: Investors, Investment Information And Social Media

Earlier in the week, the Spectrem Group announced results of the first study we’ve seen about investors’ expectations of finding investment information on social media sites. According to the work, 40% of investors are more likely to use social media to communicate than traditional channels such as the telephone. And, investors said they would be interested in following a financial services provider or advisor that provided market recaps via Twitter.

You’ll find more on the study on the blog.

In summary (you knew it had to end at some point, right?), retail (and institutional, too) investors are just as social as other consumers—they are preferring social media sites to brand sites. Given that, independent financial advisors are increasingly using social media. And other advisors seem to be getting somewhere with the pressure we hear they’re applying within wirehouses and regional broker-dealers.

While some asset managers are tentative or skeptical, early adopters say social media experimentation is not as daunting as it may seem.

Just because your firm “doesn’t get” social media yet, it doesn't mean that it can't or won't. But if you’re someone with digital marketing responsibilities, it’s your job to make certain the education takes place. We hope this report helps.

Thanks to the ICI for our access at the conference.