Companies are increasingly incorporating social media into their market- ing programs because it has been proven to attract consumer attention and to promote customer loyalty. Social media makes it possible not only to communicate with hundreds of thousands of people at once and enlist supporters to spread the word about you and your services but also to combine the benefits of immediacy and the potential for the “viral” trans- mission of information. Social media also provides for a more intimate means of communication, which sounds counter-intuitive since we’ve just referenced communications with hundreds of thousands of people at once. Social media allows one-on-one interaction and the opportunity to comment on personal milestones, including notable events (e.g., a new job, the arrival of a new baby, the purchase of a new home, pend- ing retirement). Compared to more conventional marketing tools, such as advertising and direct marketing, social media offers a number of distinct advantages, such as the following:
• It’s free or relatively inexpensive. • It’s interactive, providing the means to communicate one-to-one as well as one-to-many. • It offers immediate, direct feedback from your target market. • It’s adaptable and can be readily refined to promote ongoing success
So why haven’t more financial services firms embraced social media as part of their sales and marketing programs?
Some of the key reasons are regulatory. The Financial Industry Regula- tory Authority (FINRA), the Securities and Exchange Commission (SEC), the Investment Industry Regulatory Organization of Canada (IIROC), the UK’s Financial Services Authority (FSA), and the Securities and Exchange Board of India (SEBI) each impose strict guidelines and rules on the
use of all electronic communications, including social media for financial services, demanding careful oversight of online communications and activi- ties to ensure that advisors and brokers aren’t using social media channels inappropriately and without records. Firms themselves raise concerns about the risks of data leakage, malware, and viruses, propagated through these popular Web 2.0 channels. New technologies have emerged to address regulatory and security challenges, but financial service firms are still slow to adopt social media within their distributed teams as a means to reach out to clients and customers.