The explosion of social media as a means of communication has been stunning. And while those in professional services are just trying to keep up with the change, today’s younger generation (and frankly, more “older” people that you might suspect) has already fully embraced the change. What this means, though, is that social media is not just about some new way to do marketing and develop new clients. Instead, it means that financial services needs to figure out how to handle social media – and fast – to even remain relevant and appealing to the future generation of financial planners themselves!
The inspiration for today’s blog post comes from some recent conversations I’ve been having with young financial planners about social media, along with a great book I just finished called Socialnomics: How Social Media Transforms the Way We Live and Do Business by Erik Qualman. In the book – and a related Socialnomics video, as shown below – Qualman makes a compelling point that social media is not just a short-term fad. It represents a new medium of communication (not to mention a new way of doing business). For instance, between the impact of social media and the fact that young people create a “digital identity” of their own early in life, some colleges and universities aren’t even providing email accounts for their students anymore; at best, they simply provide a college forwarding address to the student’s own email, if that.
The video highlights the social media revolution that’s underway. And the problem is that our industry’s current approach – to clamp down on social media from a compliance perspective, with only a few firms like Securities America as a social media exception – risks completely alienating the entire generation of young people currently entering financial planning.
Think about it. Colleges not even issuing email accounts anymore. Facebook having twice as many accounts globally as the entire population of the US (and there are estimates that well over 50% of the entire US population has a Facebook account now; even yours truly!). To tell a young person to enter financial services and start working with clients and developing new ones without using social media is like telling Gen X to build a financial planning business without email, or telling a baby boomer to build a financial planning business without using the telephone. We’re not just talking about some cool new advertising mechanism here; we’re talking about an entirely new way of using technology to communicate.
No, that doesn’t mean that telephone and email will go the way of the dodo bird. For instance, the rise of email didn’t completely eliminate the use of telephones, and the rise of email and telephones didn’t eliminate a desire for face-to-face meetings or even the occasional use of a hand-written letter. But new technology does replace old; who would have thought so many households would completely get rid of landlines, in lieu of cell phones and internet-based calling services like Skype? In any event, all of these various communication mediums – telephone, cell phone, email – do support the client relationship and the business development process and become part of the larger pie. So too will social media play a role, and become a part of the communication process.
In fact, the video makes the case that point has already arrived. The question as Qualman puts it is not whether we do social media, but how well we do it. The industry’s current approach – effectively, to either ban it completely, or allow it is a marketing distribution tool but forbid its use for engaging in actual communication with clients and prospects as Morgan Stanley has done – makes us appear like we’re stuck in the stone ages. Simply put, when we tell young people to build a financial planning business without using social media, it sounds like we’re telling them to build a business using a chisel and stone tablets. The long-term viability of the industry absolutely depends on us figuring out how to adapt to the rapid change in technology-driven communication tools, or we come across as functioning in the stone ages to young people, who will simply walk away and find a less paleolithic profession to engage in… heck, even paleontology has a Facebook fan page!
So what do you think? Is the social media revolution for real? Are we making financial planning as a profession less relevant to young people with our compliance crackdown on social media tools? Is this also going to adversely impact our ability to develop Generation Y as clients and be relevant to them in the future, if we don’t figure out how to solve the social media challenge?