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How digitally enabled advisors enhance the private client experience: Recap of the SIFMA Private Client Conference

“SIFMA members share in the common goal of bettering the industry along with the ability to change it for the better” – from SIFMA Private Client Conference 2014

sifma-mainAt the SIFMA Private Client Conference hosted by the Securities Industry and Financial Markets Association (SIFMA) earlier this month, “the client” took center stage. Over 300 leaders across the private client industry gathered in New York City to discuss and share best practices regarding how to provide better client services, serve the next generation of clients, and bring on a new digitally-enabled advisor to improve the overall client experience.
Clara at SIFMA PCC     Thiel at SIFMA PCC
Our very own Clara Shih (CEO and founder of Hearsay Social) and John W. Thiel (Head of Merrill Lynch Wealth Management)–both pictured above–joined other main stage speakers at the conference including:

  • Valerie Brown, CEO, Cetera Financial
  • Gregory Fleming, President, Morgan Stanley Wealth Management & Morgan Stanley Investment Management
  • Mary Mack, President and Head, Wells Fargo Advisors, LLC
  • Robert Mulholland, Group Managing Director & Head of Wealth Management & Investment Solutions, UBS Wealth Management Americas
  • Joseph E. Sweeney, President, Advice & Wealth Management Products & Services, Ameriprise Financial, Inc.
  • John Taft, CEO, RBC Wealth Management
  • and Mike White, CMO, Raymond James Financial.
From left to right: Mike White (CMO, Raymond James Financial), Justine Metz (Head of Global Wealth Management, Marketing and Sales Support, Bank of America Merrill Lynch & Co., Inc.), Penny Pennington (Principal, Branch and Region Development, Edward Jones & Co., L.P.), and Rodney Prezau (SVP, Affluent Client Experience, Charles Schwab & Co., Inc.) speaking at the SIFMA Private Client Conference 2014.

The client experience, changing expectations and the next generation

Kicking off the conference, Robert Mulholland from UBS Wealth Management Americas shared that, with a large aging population in the U.S., discussions at the dinner table among Baby Boomers have shifted to concerns related to long-term care, including the health of aging parents.
With this changing set of priorities, Robert argued that advisors need to be attuned to their Boomer clients’ needs, as well as those of their children, in order to improve client services and the overall client experience.

With over $30 trillion flowing from Boomers to Generation Y over the next few decades, the topic of Millennials came up as a key segment for financial advisors to reach. Millennials are seeking financial advice but will check online first (e.g., Facebook pages and LinkedIn profiles) before reaching out for help or speaking with advisors, according to Valerie Brown, CEO, Cetera Financial.
Valerie added that advisors need to understand the outlook of the Gen Y investor who keeps 52% of their assets in cash, don’t want to be sold to, are much more skeptical than their parents on the value and returns of capital market, and demand transparency. Perhaps most striking: most Gen Y heirs don’t stay with their parents’ financial advisors.

With these evolving client needs and expectations, Mary Mack, President and Head, Wells Fargo Advisors, LLC, highlighted that the industry and its advisors must work to transform the client experience. She added that this is especially the case since the client is now used to interacting when and how they want in today’s world of Amazon, Google and Starbucks-like consumer experiences. Mary also highlighted in her talk that the industry must adapt to a client who is on social, digital, and mobile.

How technology can enhance, not replace, the financial advisor

To reach clients – older and younger — Brand Meyer, Head of Independent Brokerage Group, Wells Fargo Advisors, commented that people are consuming info differently – 24/7 – and that the industry must embrace mobile and online solutions as an extension of their forms of communications and services.
Valerie cited a survey stating that loyal clients have up to 24 non-financial “touches” (i.e., informal communications) per year from their financial advisor over 12 months versus those less loyal clients who get 3 non-financial touches per year on average.
So how does social media help advisors?

Raymond James CMO Mike White joins Hearsay Social CEO Clara Shih onstage at the SIFMA Private Client Conference 2014.

The digitally enabled advisor

With a growing set of Gen Y investors, an aging population of Boomers, and a third of advisors set to retire in the next ten years, a critical call-to-action was made to grow the advisor base organically and enable advisors with technology.
In her keynote, Hearsay Social CEO Clara Shih stated that social media can help the industry and financial advisors with many of the top challenges they face, from meeting the changing expectations of clients’ consumer behavior, to enabling advisors to build and deepen client relationships, to growing the advisor population, and to addressing the lack of trust in institutions by empowering the individual financial advisor.
Clara reinforced that advisors now need to meet their clients where they are, noting that nearly two billion people, including 60% of online adults 50 – 64 years old, now regularly access social networking sites.

Advisors are starting to meet that challenge: according to a recent survey, over 75% of advisors report using at least one social media account for business purposes. More importantly, they are starting to see real value from social media use.

Clara further noted that social media is an ideal, complementary channel for wealth management for three primary reasons:

  1. Clients are sharing and posting relevant, personal life events, which are key moments of truth for financial advisors to serve their clients’ needs.
  2. Millennials and Boomers go to social networks and other sites online for recommendations and content.
  3. The cost of staying in touch scales through social media, which provides wide reach while still feeling personalized thanks to photos and other forms of multimedia content supported on social media.

Clara closed by offering the audience members a few actions they can take to help their private client services succeed in the digital age. First, in order to stay relevant with end clients and advisors, leaders must help shift the organizational mindset from defense to offense for use of social, mobile and digital technologies. Second, they must help advisors seamlessly incorporate social, mobile, and digital into their practices by offering the right tools, training, and program. Finally, Clara submitted that, to be a champion for social media, the leaders in the audience need to lead by example and learn about how to use social media for business and be on social media themselves.
Hearsay Social will continue to explore these topics at its upcoming Social Business Innovation Summit next week in San Francisco. Top C-level, sales, and marketing leaders from financial services firms along with leaders from Silicon Valley companies such as LinkedIn and Klout will explore the topic of how social, mobile, and digital technologies can help transform the landscape of the financial services industry, enable advisors, and put the clients first.

Three social business takeaways from the SIFMA Compliance and Legal Society Annual Seminar

SIFMA-LogoLast week the compliance and legal community gathered in sunny Orlando for the SIFMA Compliance and Legal Society’s 46th Annual Seminar. At the seminar, compliance and legal professionals come together to discuss the significant challenges faced by the financial services community and to explore ways to address ongoing regulatory changes.

The event program was packed with over 65 topical panels and three general sessions including presentations from SEC Chair Mary Jo White, FINRA CEO and Chairman Richard Ketchum, and U.S. Attorney from the Southern District of New York Preet Bharara.


Here we’ve assembled the three main takeaways as they relate to social business and compliance.

Enforcement and data security on the rise

I enjoyed hearing from SEC Chair Mary Jo White and FINRA CEO and Chairman Richard Ketchum, and was happy to hear that both groups are working together more, especially by enforcing actions and being proactive to address those that are operating outside of securities rules and regulations. Regulators at all levels are sending the industry a strong message by enforcing rules and regulations, deterring others to overstep those rules.


U.S. Attorney Preet Bharara may have joked that infractions may not be to the extremes depicted in Martin Scorcese’s “The Wolf of Wall Street.” Infractions do need to be taken seriously, however, as regulators now mine big data for patterns and behaviors that could indicate criminal behavior. Regulators want to be more proactive about identifying risks that could lead to infractions, and now technology allows them to monitor activity and possible threats to data.

Bhara questioned the audience in his presentation by asking, if we hold institutions (and not just individuals) accountable for misconduct, does the enforcement action against a similarly situated company make a difference to their approach to security? I think it does, and I think it will.

At the “Core Compliance Programs and Practices” session, Kevin Goodman, National Associate Director of the Broker-Dealer Examination Program of the SEC, warned that conversations with executives of firms will be deeper than they have been in the past. Executives will need to know about their policies and training and be better prepared to discuss with the SEC the top five risks of the company and what they are doing to address them.

To address these risks, the panel emphasized maintaining, updating, and providing training on policies and procedures. Given the 200+ rules in place and a constant stream of guidance and notices, compliance has a challenging task to keep track of it all.  To stay ahead, firms will need to have the right tools and ensure they are documenting and keeping up with the new rules and regulations.

Technology is part of the problem and the solution

One of the biggest challenges I observed? The industry is struggling to keep up with advances in technology to monitor and control activity.

Ironically, technology seems to be both the issue and the solution when it comes to addressing these new challenges and risks. With the proliferation of employee-owned mobile devices in the past few years, risks have only increased. Firms today need to have “bring your own device” (BYOD) policies and procedures to address the growing use of smartphones and tablets for both personal and business applications. Mobile adoption introduces additional threats including insecure Wi-Fi access, bluetooth discovery and risks of cloud storage. How prepared is the industry to address these new risks?

Business is moving much faster now and technology is providing individual investors with easier access to information. As a result of the increased volume of information and speed to market, it’s becoming a bigger challenge to supervise and provide oversight.


At the “Ask FINRA” panel on Tuesday morning, Susan Axelrod, EVP of Regulatory Operations at FINRA, shared that the industry is addressing this concern by hiring more people with tech backgrounds that understand the technology and risk analytics. Carlo DiFlorio, EVP of Risk and Strategy at FINRA, added that technology allows them to be more focused with the types of searches and surveillance that they can and need to do. Similar to the SEC, FINRA is now proactively scanning to identify new risks, new threats, and new ways to protect the market and consumers.

Also on the panel was Ben Indek, Partner at Morgan, Lewis, & Bockus, LLP, who shared the unfortunate truth that the industry perception continues to be this: if something goes wrong, everyone asks, “Where was compliance?” Often it is not compliance at fault, but instead a lack of surveillance tools to keep up with the quickly moving technology.

Time to revisit social media guidelines

At the “Social Media Emerging Issues, Innovation and Ongoing Challenges” session, industry compliance experts from Charles Schwab, Wells Fargo Advisors, and Fidelity Investments joined representatives from SIFMA and FINRA to discuss the current state of social adoption and challenges.

For FINRA, social networking continues to be in “retrospective review.”  The sweeps conducted last year were light on data to provide a full picture of social use and adoption in the industry. According to Tom Selman, EVP of Regulatory Policy at FINRA, of the the 23 firms they contacted, only 15 said they allowed registered representatives to use social media. Those firms that had allowed social were taking a very conservative approach towards adoption with very limited use of social platforms (mainly LinkedIn) and sharing of content. Of the 15 firms using social media, only one had any interactive activity to share. The relative sample was quite small with little interaction to comment on or regulate. All firms were using a third-party middleware provider to protect, monitor and supervise usage and to scrape social content for any infractions or red flags.

The biggest concern uncovered during the sweeps, according to FINRA, had to do with records maintenance and the ability of firms to reproduce easy-to-interpret records of social activity. For example, they described a submission from one firm that provided data in multiple different folders, including one folder with posts, one folder with images and a third that included the post with comments and responses. FINRA was challenged to tie these activities together for a complete picture of the social activity. In my opinion, the sweeps were unlikely to cover many gaps because firms under review were being very conservative in their approach towards social media.

To their credit, FINRA is considering reconvening the Social Networking Task Force that was instrumental back in 2009 in helping develop Regulatory Notice 10-06. According to Selman, the task force could help revisit the agency guidelines. I find this very encouraging, especially now that social has been available to the industry for nearly four years and the needle has only moved slightly in adoption, at least at the wirehouse level. Regulations do need to be updated and rewritten to reflect the current state of financial services and not an interpretation of existing rules that date back to the early part of the 20th century.

In conclusion, I am hopeful that FINRA, the SEC and SIFMA will continue to focus on technical advancements and take a proactive approach to address the needs of member firms and their clients. What is encouraging is that there is an understanding of both the threats and opportunities that technological advances present and that the industry is collaborating to address them.

Hearsay Social at the SIFMA Compliance and Legal Society Annual Seminar: Deaglan McEachern (@DeaglanM), Sanjiv Baxi (@SanjivBAXI), and Meagan Herfkens (@mherf).