The Socially Savvy Advisor + Website. Stuart Fross

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      You remember that small innovation called e-mail? It changed everything from how we behaved to how we managed our workloads.

      In e-mail's early days, many compliance officers insisted, “We'll never adopt this.” But soon enough, e-mail became a part of their daily lives. Compliance officers and marketers were forced to embrace it as the rest of the world did, leading them to invent new policies and procedures in order to remain compliant with regulators.

      Imagine where your business would be today if you hadn't adapted to e-mail. The service is such a part of the landscape that nobody bothers to give it much more than a second thought. That's how it is with transformative technology – it upends the market, the market adapts, and its use is taken for granted.

      Now fast-forward another two decades or so, and have a look at the latest game-changer: social media. Today, it's a New Tech World Order, as I call it. Our society has never seen anything like it; information can be sent in nanoseconds and shared in ways that are empowering people and upending traditional ways of doing business. In the financial world, that can be information shared between investors, from a company to investors, or vice versa.

      For you or your business, that dynamic can be both a blessing and a curse. The blessing, for those who embrace it, includes getting out of the starting gate early as the market evolves. The curse is the uncertainty of the new – Am I doing this right? How do I prepare for risks I don't fully understand right now?

      One way to understand what social media means in the New Tech World Order is to look more closely at how it's affecting the lives of the clients on whom the financial industry depends.

      First, let's take a look at how today's investors are behaving. They are using the online, social world to engage in five key ways:

      1. Convening– Connecting with others like them. You're familiar with online gatherings around a profession. Even the old-fashioned investment club is more active online, with greater access to tools and content for more efficient exchanges. Consumers are increasingly gathering with those like them, whether it's to engage in impact investing, to encourage more women to move into our industry, or to call for a greener world. Yes, the online world now makes niche convening with people truly “like me” more possible than ever before.

      2. Sharing– Thanks to the new federal Jumpstart Our Business Startups Act, firms and investors are increasingly sharing information and investment opportunities. They're doing it through online investment sites that allow them to discover Warren Buffett's latest investment. Soon, they'll be accessing prospectuses of investment opportunities that previously were available only to sophisticated investors.

      3. Reacting– You've wanted to react many times. To a bad product or service or a rude professional, or, on the flip side, a great experience. Now, imagine that reaction shared online, magnified by thousands if not millions. It's happening, especially through Facebook and Twitter, as we'll discuss in the coming pages.

      4. Opining– Perhaps the biggest surprise to some is the new ease with which overnight investment gurus can emerge. Many are springing up either with their own blogs, on sites like SeekingAlpha where professionals can share their investment insights, or on financial news sites and networks, from Dow Jones' MarketWatch to Motif, a consumer-oriented social investing platform.

      5. Protecting– One of the greatest empowerment moves is the ability to help consumers make better decisions – from choosing restaurants to hiring a handyman – and protect them from bad actors. I was once asked if online networks will pose a greater threat to investors who might be prey to the next Bernie Madoff. Interestingly, in Europe, a social network for investors called Unience (sister to Finect in the U.S.) discovered that members actually acted quickly to protect fellow members from bad investment products or people. Just as one can instantly flag a spammer on Yelp, so too can they instantly call out a disreputable professional.

      These behaviors aren't occurring in a vacuum. It should come as no surprise that they've helped shape the way investors approach financial advice and related services.

Starting just a few years ago – after the financial crisis, and as social media usage picked up – investors became increasingly drawn to the Internet as a source of investment advice. This was due in large part to a massive loss of trust in major U.S. banks. Nearly 50 percent of investors now rely heavily on financial websites and blogs – ahead of financial newspapers, periodicals, and financial planners – for their investment information (see Figure 1.1).

Figure 1.1 Sources of Investment Advice

      Source: ING Direct USA's Sharebuilder Survey

      It's clear that investors, especially younger ones, are actively engaged in the online world in other ways:

      ▪ They're reallocating. According to a survey conducted by Cogent Research of 4,000 investors with more than $100,000 in investable assets, nearly 70 percent of wealthy investors have restructured their investments, started, or altered relationships with investment providers, based on content found through social media.

      ▪ They're researching electronically. Just СКАЧАТЬ