Twitter-powered Advisors Take On Vanguard, Claim A Victory

Chicago financial advisor Roger Wohlner published a blog post this morning that we recommend to you. There’s a lot to take away from this account, especially if your mutual fund or exchange-traded fund (ETF) company is not familiar with social media and Twitter, specifically, as a two-way communication channel.

In his “Vanguard and the Power of Twitter,” Wohlner describes some interaction that was initiated on Twitter between Wohlner, some other financial advisors and Vanguard.

At issue was Vanguard’s decision in October to lower the investment minimums on its Admiral Share class for fund shareholders who hold their shares at Vanguard. The lowered minimums weren’t available for shareholders at other custodians, including Schwab which Wohlner uses for his individual clients.

“The idea of Vanguard treating the clients of financial advisors holding their funds elsewhere differently (and worse) than shareholders who dealt directly with Vanguard really bothered me. This seemed very ‘un-Vanguard-like,’” writes Wohlner.

That last line is loaded. As social media becomes a more common means of communicating, expect “consumers” to play a greater role in defining the brand. Brand marketing will go only so far. It’s the community of users who will take it the rest of the way. Read this excellent report on the impact that Twitter users—quick to both evangelize and to criticize—have on brands.

On, Wohlner (Twitter account: @rwohlner) can be seen regularly re-tweeting @Vanguard_Group tweets and tweeting positive Vanguard news. More than that, though, Wohlner uses Vanguard's funds. As such, he has a stake in the Vanguard brand.

Wohlner says he and other advisors used the public Twitter stream to successfully lobby Vanguard to revise its policy for advisor clients at other custodians. It’s likely that other advisors were using other channels, but Wohlner says conversation with a Vanguard rep confirmed that the social media activity influenced the decision.

This story has a happy ending. Although there’s an economic impact for Vanguard, its response satisfied a group of vocal advisors who are influential by virtue of their social media activity and the size and composition of their following.

The Bully Pulpit

An advisor’s blog or Twitter account can be a bully pulpit. In fact, Wohlner hints at what could come: “I sent several Twitter messages to Vanguard saying in effect that it was wrong to treat our clients as second class shareholders and also asking them why they were anti-advisor.”

But no need. Twitter, Wohlner writes, “proved to be an excellent vehicle for us to pressure Vanguard to do the right thing for our clients.” He acknowledges that fund companies are taking to Twitter and agrees with the trend. “The flip side is that the fund companies should expect to be called out when they do something as short-sighted as what Vanguard did recently.”

At the risk of writing twice as many words as Wohlner did, we’ll end this post with two questions for you:

  • If you’re in the (asset management) business, do you still think it’s up to you and your management whether you will participate in social media? We think Vanguard had an advantage because it was on Twitter, it was listening and it was quick to respond. Unprepared fund companies would be at a disadvantage.
  • Where was the wholesaler in this communication thread? Advisors who are finding their voice online are going direct. Response to them is not going to be able to queued according to previous stratifications: national account, channel, production or assets under management.