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As the popularity of social media rises - from Facebook to LinkedIn to Twitter - advisors are increasingly asking "what's all the buzz about" and "why should I care?" As many point out, planners develop new clients primarily by getting referrals from existing clients, and having face-to-face meetings to get to know them better. No one makes a decision about who to give their life savings to based on a Facebook page, right!? Perhaps, but a focus on the new business development opportunities from social media misses an important but crucial point - there's already plenty of value to be derived from social media, just by connecting to your EXISTING clients, to deepen the personal relationship you already have with them!

The inspiration for today's blog post comes from a panel discussion on social media at the FPA Retreat conference, moderated by Bill Winterberg, and including social-media-active financial planners Rick Kahler, Tim Maurer, and Carl Richards

During the session, the panelists shared some of the ways that business opportunities had developed for them through their activity on Facebook, LinkedIn, and Twitter. But what struck me the most as I listened to the session was the way that many of the planners used social media not only to develop new business, but to reinforce the relationships with their existing clients. This was further reinforced in a follow-up presentation by Winterberg, entitled "Cultivating Clients in a Connected World" where he shared more ideas and examples about how social media can be relevant for your financial planning practice.

For instance, Winterberg gave a personal example where he tweeted (a post to Twitter) about the fact that his son was starting day care, opening up more of his time to do additional consulting work. Although a somewhat social announcement, Winterberg pointed out the numerous financial planning implications of the brief announcement, from claiming the Child and Dependent Care tax credit, to adjusting estimated taxes and self-employed retirement plan contributions for increased income, to getting business advice about not expanding the consulting too fast because the first few months of child care tend to coincide with a rise in illnesses for the parents as they build new immunities to all of the cold and other germs brought home from day care!

The point here was that interacting with clients through social media becomes an opportunity to become more deeply and actively connected to your clients - and in a world where financial planning focuses so centrally on deep personal relationships, the more connection, the better! Accordingly, if your goal is to maintain a personal relationship with clients, how could you NOT "friend" them on Facebook, link to them on LinkedIn, and follow them on Twitter - the first places they're likely to announce a birth, a death, a job or career change, or any number of smaller events (like a child going off to day care) that could have financial planning implications. As one planner noted after the session, "It's friendly to ask clients if they took any recent vacations; it really shows you're connected when you've already seen from Facebook that they took a trip to Hawaii and ask them what they thought of their hang-gliding experience from the photos." Another planner noted that he found out about his client's big promotion from an announcement on Facebook and updated job title on LinkedIn long before the client ever called to tell him... giving the planner an opportunity to initial the contact to the client, congratulating him on the change, and reviewing important financial planning issues that arose because of the big increase in income.

Of course, as Winterberg and others point out, it's a good policy to ask each client whether they're comfortable being connected to you with social media. But most of the planners who were active with it at the conference indicated that the overwhelming majority of their clients welcome the connection, and that the planners gain immense additional insight into the ongoing lives and reality of their clients once they are connected.  

So what do you think? Would you connect with your clients through social media? Do you? Is social media just as relevant - or perhaps even more relevant -as a means to deepen the connection with existing clients, as opposed to just viewing it as a tool for developing new business? If financial planning is all about developing deep personal relationships with clients while you guide them to their long-term goals, are you missing out by not being active on social media?

  • Pat Allen

    Another great post, Michael.

    Social scientists have a name for this deeper connection—“ambient awareness.” The advantage, according to a 2008 in-depth article in the New York Times on digital intimacy is the ability to pick up on moods through the random comments that social media sites are so good at enabling.

    This works for existing clients and for people met via the social sites. Everyone who has “met” anyone on Twitter, for example, will tell you that the initial physical conversation takes off at an advanced place because so much information has already been gained incrementally online over the course of several tweets. We learn a lot from seeing details of people’s lives and thoughts when they show up consistently in our tweet streams.

  • Susan Weiner, CFA

    Thanks for raising these questions. You are a great conversation starter.

    I like Pat’s comment, too.

  • Joseph Alotta

    Things are not different in social media then they are in social living. There was always the guy in High School that was promoting himself. There are the people who only want to talk about themselves. There are the social climbers. There are the philanderers. There are the political types. I meet all these kinds of people. In a personal social situation it is not about how do I get my message out, it is about how can I gain the respect and acceptance of others. Unless people are thinking in these terms, no lasting relationships are developing.

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Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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Out and About

Wednesday, September 9th, 2015

*Future of Financial Planning in the Digital Age *Modern Portfolio Theory 2.0 @ FPA San Diego

Thursday, September 17th, 2015

*Future of Financial Planning in the Digital Age *Social Media for Financial Planners *Understanding Longevity Annuities and their Potential Role in Retirement Income @ FPA Colorado

Monday, September 21st, 2015

*Cutting Edge Tax Planning Developments & Opportunities @ MetLife