Social Media: Marketing Friend or Compliance Foe?
Friday, March 30, 2012 09:26

 Social media seems to be everywhere these days. As a recent study published by Financial Planning magazine shows, just over half of advisors are using social media like Facebook, Twitter and LinkedIn in both their personal and professional lives. According AdvisorOne, nine percent of all LinkedIn users are in the financial industry. However, with compliance concerns on the rise, it can be difficult to know what you can post and what you cannot. 

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An increasing number of firms are creating policies on the use of social media, but many are still nervous about utilizing these methods to obtain clients and market themselves. There are no “hard-and-fast” rules, but here are some general guidelines to abide by:

  • Record Everything—FINRA recently toned down its filing requirements regarding social media, but this does not mean that they won’t examine your posts. As an advisor, you’re used to keeping proper documentation, and this does not stop when you get to social media websites. Recording also helps you to keep track of what you have and have not put online so you don’t repost the same article or message.
  • Determine the Level of Involvement—It can be difficult to decide whether your firm should obtain a Facebook page or not, or whether each advisor in the firm is expected to maintain a professional profile. Keep in mind, the more people involved, the more monitoring that needs to be done and the greater the potential for compliance violations.
  • Discover the Benefits of Social Media—Will social media help you to obtain prospects or will it consume your time without any results? In our experience, LinkedIn is particularly helpful in obtaining clients (if properly optimized), but it really depends on your practice.
  • Separate Business and Personal Accounts—This may seem like an easy one, but it is one of the most important principles to follow. If you, an employee or other advisor in your firm posts something work-related on their personal social media page, it can result in the same consequences as if they posted it on their work profile. Once something is posted, even if deleted, it was still there and could have been seen by a client or prospect. Make sure that everyone in the firm knows how to strictly maintain these boundaries.
  • Open Accounts, but Don’t Post—If you’re worried about compliance but still want to get involved in social media, go ahead and join. If you don’t post anything but instead use the accounts to keep up-to-date on your clients’ lives, you can still enjoy the benefits of social media websites. By having a LinkedIn, Facebook, or Twitter, you can see when John Doe finds a new job or when Jane and Chris Smith have a baby. This way you can preempt their questions about 401(k) rollovers and college savings accounts by sending them congratulatory emails and asking them if you can be of any assistance.

Social media can be a great tool for advisors, if used properly, but the compliance worries associated with it can scare away many in the retirement industry. By following some guidelines, you can avoid compliance problems while gaining a great ally in the age of technology.

How to Keep Clients Investing In Uncertain Times
Thursday, March 08, 2012 15:59

A recent study conducted by Invesco and Cogent found that, of the 206 RIAs surveyed, 99 percent listed market volatility as one of the top three concerns for their clients. Fully 70 percent listed it as the number one concern, followed by 45 percent who listed managing risk in portfolios as their top worry. Among recent reports of low and slow growth over the coming year, many advisors are wondering how they can keep battered clients investing their money. There are a variety of ways to encourage clients investing in their financial futures.

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For the Risk-Averse Investor
Your clients are probably scared of taking any major risks, and who can blame them? Risk is a natural part of investing, and they can reduce their risk by selecting “safer” investments. However, are these investments the best choices? Sit down with each of your clients and explain to them the risk level of their current asset allocation. Show them the average growth of portfolios at similar, higher and lower risk levels. Typically, investors that take higher risks have higher average gains. Loss will happen, but it doesn’t mean that investing in “safer” options will result in the highest or steadiest portfolio growth.
For the Anxious Participant
Clients and participants experience less anxiety when financial advisors communicate with them regularly. If they know what is going on, investors will likely feel more confident and may contribute more to their retirement accounts, even during uncertain economic times.
For Those Who Don’t Want to Invest Right Now
Many investors’ portfolios took more than a few hits in the last year, but that shouldn’t reduce the amount of contributions that participants make to their 401(k)s or other investment accounts. Of course, they may still sustain losses this year, but those losses are nothing compared to missing out on a financially secure retirement. Skipping even one year of contributions can postpone retirement by a few years.
Due to recent volatility, investors are uncertain of their financial futures. This has left many risk-averse and not wanting to contribute to their retirement accounts. Some see investing now as simply throwing away their hard-earned money. However, by explaining risk and asset allocation, by communicating regularly with clients and by encouraging participants not to miss contributions, financial advisors can keep clients investing in their futures. 
Most Retirement Plans Are Breaking Labor Department Rules, And The Fines Are Enormous
Wednesday, February 22, 2012 09:45

Tags: 401(k)

No wonder a lot of 401(k) administrators dragged their heels to fight both greater fee transparency and greater fidicuary responsibility. The Labor Department has to hire hundreds of auditors just to keep up with infractions.

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A full 70% of all plans that got audits in 2009 and 2010 were in noncompliance, earning an average of $450,000 apiece in fines.


In all, DOL recovered a staggering $1 billion in 2010 alone.


Most of the problems stem from bookkeeping errors and other oversights -- only 96 people associated with retirement plan offenses were charged on a criminal level in 2010 -- but these are exactly the types of error that third-party administrators make their money preventing.


Frequent mistakes the DOL auditors see: sluggish deposits, missed filing deadlines, failure to meet rank-and-file employee participation thresholds, and even outright mismatches between business and plan structure.


Plan lending remains a sore spot as well, but everyone in the industry recognizes that this is an area that most plan personnel find confusing.


Nonetheless, these are all preventable problems, and advisors who can prevent them can save the plans they work with a great deal of money -- not to mention market themselves as such.


A "Final" Deadline For 401(k) Fee Transparency: July 1
Friday, February 03, 2012 09:54

Tags: 401(k)

Retirement plan service providers have known that new fee disclosure rules were on the table for ages now, but the latest extension may actually be the last. 

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DOL says July 1 is the drop-dead date for 401(k) plans to break out their fees in plain English.


This is roughly a year after the rule was originally set to go in effect.


Service providers have consistently balked, arguing that they don't have enough time.


At this point, can we really blame technology? Or is there some other reason they don't want plan participants to see exactly what they're paying for their nest eggs?

Why Are The Eggheads At Dimensional Fund Advisors So Focused On The 401(k) Business Opportunity For Advisors?
Thursday, January 12, 2012 12:39

Tags: 401(k) | marketing | niche

Dimensional Fund Advisors has a track record of supporting best practices in investment management and grounding its solutions on academic research. DFA is embraced by many of the smartest advisors I know. So when DFA’s website is plastered with content about the opportunity for advisors in the 401(k) business, you want to pay attention.

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Apollo Lupescu, who heads DFA’s advisor 401(k) business, said in a recent article that advisors who want to get into the 401(k) advice business have two options: build their own solution or outsource. DFA has a way to enable advisors to outsource most of the operational, investment research, and administrative hassle of the 401(k) business while staying at the center of the relationship with a plan sponsor, and while limiting the fiduciary risk associated with advising plans.
This story actually begins when Andrew Fox, CFP, of Fox Financial, who sent me a template email announcing that “recent regulatory changes and technological advancements have now made the time perfect for Fox Financial to start offering 401(k) plans to businesses of all sizes.” Fox’s email prompted me to ask him what he was doing. He introduced me Lupescu.
Lupescu, who holds a Ph.D. in economics, says a confluence of events have opened a window of opportunity for private wealth advisors to enter the 401(k) business. Basically, changes in rules at the Department of Labor on 401(k) advisors and the role of fiduciaries along with bloated fees charge by many large plan providers and new disclosure requirements make this a good time for advisors to look at the 401(k) business.
An article by Lupescu and another one featuring Robert Merton explain ideas driving DFA's 401(k) strategy. Merton is the School of Management Distinguished Professor of Finance at the Massachusetts Institute of Technology and University Professor Emeritus at Harvard University.
With fee compression accelerating and the need for specialized knowledge growing, tomorrow’s webinar at 4 ET featuring Lupescu should be valuable. You can register for this free session,  you may wnat to view The 2012 401(k) Opportunity For Advisors: What's Changed, Why Now.
Incidentally, we’re making a change in our policy for distributing the slides at A4A webinars. You’ll need to be signed up as an A4A member to get the slides at these sessions. If you are not a member, please sign up at www.advisors4advisors.com.



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