What an an honor it was seeing our CEO Clara Shih take the stage at this week’s inaugural FortuneMost Powerful Women Next Gen conference, a meeting of esteemed women leaders across business, government, the arts and other sectors.
In a unique session focused on women board members, Pattie Sellers (Senior Editor at Large at Fortune and Co-founder of Fortune MPW, @pattiesellers) spoke with Gerri Elliott (board member of Whirlpool, Bed Bath and Beyond and Charlotte Russe, @gerri_elliott), Caterina Fake (Chairman of the Board of Etsy and board director of Creative Commons, @Caterina), and Clara Shih (board member of Starbucks and Hearsay Social, @clarashih).
Each shared her unique journey to the boardroom and the individual challenges they had to overcome to get there. Of course, earning a seat in the boardroom is not the end of the journey–it’s the beginning.
Celebrating innovation, technology and social business, Hearsay Social last week hosted its second annual Social Business Innovation Summit in San Francisco, bringing together executives and thought leaders from across the financial services and technology industries.
In attendance were CEOs, heads of sales and distribution, CMOs, and compliance officers, who packed Dogpatch Studios on Thursday morning to network, learn and understand the trends and themes that are guiding how people buy products and services as well as the opportunities and challenges driving financial firms to adapt.
Inspired by the rapid-fire, rousing talks given at TED conferences, the Summit provided those in attendance–and anyone following our Twitter hashtag #SBIS14–a front row seat into the future of technology and innovation and how businesses will survive and thrive.
See below for photos, tweets, and four key takeaways from the Summit.
Social media is about enhancing human capital, not replacing it
Kicking off the Summit, Hearsay Social CEO Clara Shih (@clarashih) shared how client expectations are changing, and technology is altering how consumers make buying decisions. Online sources today are key influencers in each purchase and consumers are conditioned to expect personalized service and an ability to communicate with brand on their own terms and with their own devices.
Faced with an aging advisor population, the firms of tomorrow need to prepare to serve the next generation of investors and provide the tools to recruit the talent that will serve them. Technology scales and offers the ability to serve those previously unreachable, as it challenges and redefines existing models.
Client expectations are changing, and technology is altering how consumers make buying decisions. Online sources today are key influencers in purchases. Additionally, consumers are conditioned to expect personalized service and an ability to communicate with brands on their own terms, with their own devices, through their own channels.
Chris Andrews (Managing Director, Northwestern Mutual) and Karen Kehr (Financial Advisor, Ameriprise Financial) shared how they are using social media to grow, maintain and serve their base of clients in this new climate. Key to their success was the realization that many of their clients were already using social media platforms to network and connect. A personal and professional presence was a natural extension of their existing platform use, allowing them to convert friends into clients and find new opportunities through organic referrals.
Establish a culture of innovation
Founded in 1847 in Philadelphia, Penn Mutual has seen its share of changes, and according to Eileen McDonnell (Chairman, President & CEO, Penn Mutual), the industry is in crisis. By the year 2020, over half of the workforce will be comprised of millennials, and financial institutions need to find a way to connect and add value to these consumers. The changing face of insurance means that firms need to broaden their reach to capture new talent, especially women and millennials.
This means firms need to employ tactical initiatives to address the change by choosing the right partners, embracing innovation, and stop making excuses.
“It’s not an either/or situation. People retreat to what is comfortable to them. It will tweak…but I do believe that there will be a next generation of advisor force that will operate very differently, and they will need to co-exist.” — Eileen McDonnell, Penn Mutual
Although Eileen admits that not everyone will be open to change, the next decade will show us new producers, as well as established ones co-existing to serve the market.
Set the vision, empower the team, and keep moving forward – solid advice from Eileen McDonnell on keeping up w/the times #SBIS14
On the advisor panel, Karen Kehr shared how she uses Facebook and LinkedIn to build brand awareness and connect with the multi-generational clients she serves. Through social media, she is able to connect on a personal basis with clients, getting to know their kids and grandkids, which makes the transition to new relationships and business easy.
Chris had a similar experience: recognizing that the financial services business is about high trust relationships, he understood that the ability to relate and share in similar circles makes it easier to grow a book of business based on commonality. Long gone are the days of using the phone to connect with new prospects and expect any kind of exchange, especially when people are avoiding their phones or not using them at all.
“The old models of calling people worked in the 1950s. The 40-calls-a-day model is now broken. There is a lot of power in social, lots of information, and we need to keep it personal.” — Chris Andrews, Northwestern Mutual
Social doesn’t just help grow new business, but it also helps retain existing business. People will continue to work with advisors they trust and can relate to, and social makes it easier for people to understand who you are on a personal and professional level. It reduces the intimidation that one may feel working with a financial professional and makes clients feel comfortable and connected.
The dial-and-smile mentality is broken and no longer addresses how clients are making buying decisions. Karen concluded: “If you don’t have a presence, you don’t count.”
Joe Fernandez (CEO and founder of Klout, @JoeFernandez), whose software measures social influence and explores how people buy products and services, expanded on this idea during his presentation.
People today don’t pay attention to ads or billboards like they used to, and consumers are using information from peers to differentiate and select products. We listen to our friends, not brands.
“84% of millennial say user-generated content influences what they buy.” — Joe Fernandez, Klout
The leverage and reach provided by social media has increased the power consumers have over brands to influence the perception of products and services. In the post-advertising world, we only care what our friends say, and the power shifts back to consumers. If you don’t recognize the power of the people, you are missing an opportunity.
As an example of one platform that empowers both individuals and brands, Ralf VonSosen (Head of Marketing for Sales Solutions from LinkedIn, @rvonsosen) shared how LinkedIn is helping professionals connect with current and prospective clients, making them more productive and successful.
In total, LinkedIn has over 300 million global members representing 300,000 jobs and billions of updates on a daily basis. They have built their platform to focus on three main areas:
Identity: The resume is not as important as it once was when you can now use a digital resume that brings to life your professional background and the ability to create an online brand.
Networks: LinkedIn continues to expand the growth of the network and talent pool available on a global basis.
Knowledge: LinkedIn is quickly expanding as the definitive professional publishing platform, as evidenced by its acquisition of SlideShare, the growth of Groups and Pulse, and the expansion of its Influencer program.
At a high level, LinkedIn continues to define the role it plays in providing value to its members and continues to develop the platform to serve as an Economic Graph–a digital representation of the economy by connecting talent with opportunity at a massive scale and creating a capital of talent.
“The vision is to digitize this and then leverage this capital to where it can be more productive.” — Ralf VonSosen, LinkedIn
For users, this can only increase the value that LinkedIn provides its members, whether they are looking for job, a connection or new talent.
Resist naysayers and embrace disruption
Tapping into its Silicon Valley network, Hearsay Social was proud to present a unique panel of entrepreneurs–Bill Ready (CEO, Braintree, @williamready), Aaron Vermut (CEO, Prosper, @vermooti), and Bo Lu (CEO and founder, FutureAdvisor, @bolu)–who joined the Summit to share their views on entrepreneurship, technology trends in financial services, and how to succeed in the digital era. The panel was moderated by Amir Efrati (Senior Reporter, The Information, @amir).
Although each business is focused on a unique value proposition, they each share a common theme: disruption.
Whether it’s addressing the underserved masses with financial advisory services, micro-lending opportunities or new payment options, each company is challenging existing business models with ones that are meant to improve efficiencies and client experiences.
This is not unlike what social media is doing in financial services. It would be easy for advisors and firms to ignore the benefits of social media and hide behind the excuse of regulatory or compliance concerns. As the panel of entrepreneurs pointed out, however, the changing consumer base is wired differently, and technology is making it easier to disrupt existing systems that have yet to evolve, echoing some of the same sentiments shared by Joe Fernandez of Klout and Chris Andrews from Northwestern Mutual.
John Taft (CEO of RBC Wealth Management — US) provided a different perspective on the disruptive challenge these new companies are creating. Like Eileen before him, John recognizes that the next generation investor’s mindset is different and that more established brick and mortar businesses need to adapt to serve this new consumer. But it won’t happen overnight. And not all consumers are the same.
Financial services continues to be a high trust, high touch business that demands a personal relationship. The average age of clients is in the mid-50s and their advisors are about the same. Businesses have been built around the trust that advisors gain through personal connections established at local golf clubs, associations and common interest groups. RBC Wealth Management – US, although progressive in its approach to social, is not looking to address the unseen client market. That being said, they are looking to explore the effect that digital technology is having on wealth management.
People want to support businesses whose principles align with their own. — John Taft of @RBC#SBIS14
John challenged the notion that younger generations don’t like or use the phone because it’s really a matter of where you are in your life cycle. Life gets more complicated as you age, as do your needs. Professional advice is a premium and, the more complicated your life gets, the greater the need to have someone help you navigate through the tough decisions.
To this end, technology is both part of the problem and the solution. Although consumers today have access to more information and are perhaps more confident to make decisions on their own, it’s still a relationship business. Social media provides the avenue for shared values and ideas that ultimately make it easier for people to select the financial professional who is right for them.
Bryan Schreier (General Partner at Sequoia Capital, @schreier) agrees with John that Generation Y is unlikely to abandon their phones once their lives get more complicated.
Sequoia Capital spends a lot of time listening to college-aged consumers. What they’ve discovered is that this generation has a “lean back” mentality and prefers to see things in their social streams. They are very willing to share — by taking photos, using Snapchat and sharing online. However, they also expect the brands and services to come to them–an important lesson in the high touch and high trust environment of financial services.
Today, in the age of information, strong relationship management matters, and those that embrace technology to scale both new opportunities and maintain existing relationships will have success. There is a premium in offering personal attention and nothing beats face-to-face; in fact, that’s why we hosted the Innovation Summit in San Francisco, not online via a Web connection.
We’d like to thank all of our clients, partners, speakers and panel members for joining us in San Francisco. And thank you to all of those who joined us on Twitter using hashtag #SBIS14, as well as the Hearsay Social team who made it happen.
Ed. note: The following post, authored by Yasmin Zarabi (vice president, legal & compliance, Hearsay Social), originally appeared in Financial Planning.
As social media grows increasingly popular among RIAs, there are still questions regarding testimonials, endorsements and recommendations on social sites. The SEC’s recent guidance allowed for certain use of third-party commentary on social media that would not violate the “testimonial rule.”
Here’s what investment advisors need to know now.
Since the 1940s, the SEC has forbidden RIAs from promoting client endorsements or testimonials in anything that constitutes an “advertisement.” Rule 206(4)-1 under the SEC Investment Advisers Act of 1940 prohibits an RIA from publishing, circulating or distributing any advertisement which refers — directly or indirectly — to any testimonial of any kind concerning the RIA or any advice, analysis, report or other service rendered by the investment advisor.
But in the digital age, clients can effortlessly use social media to endorse and recommend their advisors with just a few clicks. The SEC has issued a couple of clarifications related to social media. Back in January 2012, it published a National Examination Risk Alert on Investment Adviser Use of Social Media, outlining its concerns about RIAs’ use of social media and describing how clients can provide recommendations and endorsements. More recently, in March 2014, the SEC issued Guidance No. 2014-4 — Guidance on the Testimonial Rule and Social Media — providing further clarity on investment’s advisors’ use of third party commentary on social media.
How could a third-party comment or social media “action” be viewed as a “testimonial” on social media and therefore prohibited? One thing is clear: In its guidance, the SEC says an investment advisor should not invite its clients to post commentary directly on the investment advisor’s own social media site or page.
But what uses of third-party commentary would be permissible by the testimonial rule?
LinkedIn recommendations & endorsements
LinkedIn endorsements and independent recommendations about the advisor’s skills should be avoided. An endorsement can occur in two ways: A client could endorse an advisor for a skill that is already listed on his or her profile or a client could initiate an endorsement for a new skill that does not already appear on the advisor’s profile.
To avoid the first scenario, advisors should select “No” for the “I want to be endorsed” feature under the “Skills and Expertise” section on their LinkedIn profile to turn off the feature that allows clients (other LinkedIn users) to “endorse” their skills. In addition, if a connection attempts to add a new skill to the advisor’s profile, the advisor should reject the endorsement to avoid violating the testimonial rule under the Advisers Act.
Recommendations on LinkedIn are completely separate from endorsements. They are free-form written opinions of one’s professional skills, accomplishments or experience. A client can choose to recommend an advisor or an advisor could request such a recommendation.
If advisors receive unsolicited recommendations, they have the ability to review and approve the recommendation before it appears publicly on their profile. Advisors should not accept or request any recommendations on LinkedIn. Advisors may also want to add a preemptive note to the Summary section of their profiles to say up front that they will not accept recommendations or endorsements.
Advisors should avoid retweeting any tweet from either a securities research analyst or a client who is providing a testimonial about the advisor’s performance or a product or service of its firm.
Social media “likes”
Many firms also worry about the interpretation of a like on Facebook or LinkedIn, or having viewers choose to “favorite” a tweet. Likes can mean many things: For example, a like from a third party may simply indicate that a visitor enjoyed an article that was shared or appreciates the artwork on a page.
Much depends on context: The 2012 SEC Risk Alert was careful to state that interpretation of a like as a testimonial is based on the facts and circumstances. A like that an advisor solicits as an indication of a client’s experience with the firm may be construed as a testimonial. However, a like on a photo of an advisor’s new baby may not.
Links to third-party sites
The March 2014 SEC guidance also clarifies how advisors can use third-party commentary on social media. According to the guidance, advisors should not link to commentary on a third-party social media site unless they can demonstrate all three of these:
That the advisor has no ability to affect which public commentary is included or how the commentary is presented on the independent social media site.
That the commentator’s ability to comment is not restricted.
That all comments, both good and bad, can be viewed publicly.
Takeaway: rules for advisors
Financial regulations only prohibit the use of testimonials or endorsements that are related to financial services and the ability to manage money. But advisors can avoid violations of the testimonial rule by following these guidelines:
Do not list any skills on your LinkedIn profile.
Turn the LinkedIn endorsements feature off.
Do not accept any LinkedIn endorsements initiated by a third party.
Include a disclaimer on your LinkedIn profile instructing third parties not to endorse.
Only share links to independent third-party social media sites on which you have no influence on the third-party commentary and you are not materially entangled with the third-party social media site.
Do not cherry-pick favorable client testimonials or endorsements on your social media pages or any advertisement. If you allow testimonials, you have to show the good and the bad commentary, and not just the favorable comments.
In general, advisors should avoid soliciting client feedback in a way that may frame a Facebook like or a third-party post as a testimonial.
And as a best practice to limit their risks, advisors should prominently display language on their LinkedIn and Facebook profiles indicating that they (and their firms) are not responsible for and do not encourage third parties to post anything on their behalf.
Given that the financial regulations relating to social media are relatively new, and social media platforms continue to evolve in their uses and the ability to effect controls, firms should consider the guidance in light of their organization’s policies for their advisors.
Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.
Would you believe that social media and social networks are mostly untapped across both the enterprise and consumer landscapes?
That’s the finding of a McKinsey Global Institute report entitled The Social Economy: Unleashing Value and Productivity Through Social Technologies. In advance of the report’s publication, several of the best minds in social media met in San Francisco for a panel discussion hosted by the Churchill Club, which has organized events for a quarter of a century with big names like Bill Gates, Bill Clinton, and Arianna Huffington.
For the social technologies-focused session, Hearsay Social CEO Clara Shih sat on the panel amongst esteemed leaders in the social media space, including Wendy Arnott, VP of Social Media, TD Bank Group; BJ Fogg, Founder and Director, the Persuasive Technology Lab at Stanford University; David Gutelius, Chief Scientist, Jive Software. The panel was moderated by Michael Chui, a Senior Fellow at the McKinsey Global Institute.
View the discussion in its entirety in the video below and check out some of the best live tweets from the event: