Investment Week’s social media conference took place last Friday, bringing together an illustrious cast of industry thinkers, digital leaders and legal experts. Here are some of the key points we heard:


1. For Asset Managers, There Are Costs to Using Social Media – And To Not Using It

During an enlightening, data-rich talk, Arianna Arzeni from CACEIS highlighted how much asset managers have already adapted to social media – but also how far they have to go.

While the trend is clearly toward greater use of social media by investment managers, Arzeni stressed that it simply isn’t worthwhile to view it purely as a means for broadcasting company messages. To work, social media requires a firm commitment at a strategic level, with clearly defined goals. Such a strategy is neither easy nor cheap, requiring buy-in from all levels of the company and extensive efforts related to training, compliance and organisation. Equally, Arzeni said, opting out of social media should be a clear, strategic decision. But this would also incur costs, not least impeding your ability to listen to conversations taking place on social media, and the brand-management opportunities this affords.

2. Social Media is Disruptive, But Also a Great Opportunity

For such a long-established, heavily regulated industry, social media, and digital more generally, has already shown its disruptive power. Citing services that had risen along with social, Arzeni said that crowdfunding, P2P lending and copycat investing (enabling people to mimic the strategies of leading investors) had already forced investment managers to examine how they add value.

However, Arzeni showed the potential for investment managers too, with the example of Chinese messenger service WeChat. Already, WeChat incorporates a money-market fund, into which users can transfer money directly using the app. While acknowledging that such a service was probably some way off in tightly regulated Western markets, she thought that something similar would arrive soon over here, too.

3. The Power of Employees

Further acknowledging the challenges faced by social-media managers at investment firms, Ed Griffin, the financial services account director at Hootsuite, led his audience through the process from individual social advocacy to a comprehensive, company-wide social strategy. In a talk rich with tips, Griffin stressed one point in particular for social-media types looking to increase engagement with their content: use your employee network.

Properly engaged employees, Griffin said, could be the key factor in your company’s content breaking through over the next 12 months. To achieve that, social-media managers would need to be increasingly mindful of what content gets to which employees, and when. Tools offering precisely that function are increasingly prevalent, Griffin said (not least Hootsuite’s own Amplify), before pointedly asking: if your own employees don’t care about your content, why should your customers?

4. Compliance, Compliance, Compliance

It should come as no surprise that the section that generated the most rapt attention was compliance. Though the FCA has published guidelines on social-media use for finance companies, it was clear that those rules continue to prompt as many questions as they answer.

Among the slew of issues raised were when it’s OK to retweet praise from a customer, when you can retweet news stories about your company, and who is responsible if one of your tweets is edited (to remove disclaimers) and then shared. In part because social-media use in investment management is still in its infancy, and partly because the FCA has said it doesn’t want to be too proscriptive, cast-iron answers are difficult to come by. However, the main points stressed during the talk were:

· Communications must always be “fair, clear and not misleading”.
· Unless they include a risk warning, communications must avoid being “an invitation or inducement to engage in investment activity”.
· All employees (and third-party vendors) must be aware of precisely what the company’s policy is on social media.

5. Data is Key

In an event so underpinned by risk and how to deal with it, Kimberly Yurisich from EY pointed out that data can be enormously powerful in handling precisely this issue. By poring over data, investment manages won’t just derive the usual benefits of tracking the success of their digital campaigns, they can also help identify red flags, create slicker compliance processes, and even formulate policies that can help more employees get involved. This, Yurisich said, can even help with the company’s bottom line.

6. Social Media is the New “Bring Your Own Device” Challenge

A veteran of Dell, Mike Pagani, now a director of product marketing at Smarsh, directly compared the rise of social media to the emergence of the “bring your own device” trend that emerged in the corporate world over the last decade. Just as with using your own phone for work, the response of IT or compliance teams would evolve from rejection (an outright no) to partial acceptance (use of approved devices/platforms only) to fully fledged adoption. This process, he said, is already well under way with social media in investment management.

The challenge for compliance is vast. Given the inherently spontaneous and speedy nature of social media, the conventional methods of sign-off, which can take days or even weeks, simply don’t work. In addition, social media communications are every bit as subject to FCA regulations (and fines) as white papers or TV ads. Despite all this, some 61% of finance companies using social media have no archiving system in place.

Smarsh is one of several leading the way in attempts to address this. By archiving everything from Tweets to Skype messaging and WordPress comments, archiving tools let companies store and, in the event of disputes, access any social-media communications. In doing so, they are helping prod larger finance companies from having to sign-off all social-media posts in advance, to having a system of checks in which an in-built algorithm immediately flags any potentially problematic content.