September 2013

SOCIAL MEDIA: Freedom of speech

Social mediaFears about regulation, or of just boring people, makes social media hazardous for asset managers. But some firms have found ways to free themselves on various internet channels, finds Fiona Rintoul. If asset managers were not first out of the traps with social media, they are now embracing the cornucopia of communications possibilities that the term encompasses. A 2012 asset management social media survey of 100 asset companies by PR firm MHP shows that asset managers are increasingly active on LinkedIn, Twitter, YouTube and Facebook. The 2013 survey, which will be released shortly, confirms the trend. The ways in which asset managers are using social media are many and various. Franklin Templeton, for example, has two blogs and several Twitter accounts, as well as using LinkedIn, Facebook, Google+ and YouTube. “Franklin Templeton’s social media efforts are designed to extend our touch points with financial advisers and clients,” says Wendy Harrington, head of global marketing services at Franklin Templeton Investments. “Our goal is to enrich the experience by engaging investors with helpful insights and perspectives from our portfolio managers. We’re also increasingly using social platforms internally to foster collaboration across our global offices.” This embrace of social media, which often remains guarded – the MHP survey also reveals, for example, that some asset managers have secured a Twitter handle in their name but do not tweet – and is not yet universal, throws up all kinds of questions. Regulations, tone, jurisdiction and content are just a few of the issues that need to be addressed by asset managers using social media, for if anything proves the old adage “just because you can, doesn’t mean you should”, it is social media. BORING PEOPLE STUPID
The possibilities are endless – and so are the opportunities to get it wrong. How, then, can asset managers develop a coherent and effective social media strategy that doesn’t squander resources, create the wrong impression or, worst of all, bore people stupid? It’s a pressing question because staying away from social media is rapidly ceasing to be an option for any but the most low-key of asset managers. “The social media aspect of marketing is really what marketing will become,” says Baldwin Berges, a managing partner at specialist frontier markets fund manager Silk Invest. “There is no way around being online and making sure that your information is accessible and making sure that people can understand who you are and what you do.” These statements from Berges, who also advises financial services companies on social media and content marketing in association with Perfecta Partners, don’t sound like much if you say them quickly, but they imply a revolution in how investments are marketed and sold. “Sales people are increasingly less influential when it comes to investor decision making,” says Berges. “A lot of private wealth is now managed by family offices. They don’t want to be called; they want to call you. They really want to be able to understand the manager from a distance first, and when what they see makes sense to them, then they want to meet with managers.” Martin Forrest, author of the MHP report, sees this dynamic influencing the future of institutional sales as well – with a knock-on effect on the retail marketplace. YouTube interviews with fund managers, for example, are similar to the due diligence process a pension fund goes through. “It’s the same thing,” says Forrest. “You’re getting a sense of who the fund manager is. You could almost short circuit the due diligence if you had enough faith in YouTube. And it’s great for retail investors to enjoy the same privileges as institutions.” In addition, some audiences are best reached, or in some cases can only be reached, through social media. Younger investors may consume news primarily or exclusively through social media and retired people are big adopters of social media, says Forrest. A Cogent Research survey of 4,000 investors in the US with $100,000 (€74,672) of investable assets also shows 34% use social media for personal finance and investing purposes. Increasingly, asset managers recognise what this means. “Social media has become an obligation so we can meet the audience and push our publications,” says Sarah Marteleur, press and communications manager at BNP Paribas Investment Partners (BNPP IP). “Many clients, especially in the asset management world, are present on social media, and we have to meet them there.” Once asset managers are on social media, meeting the audience, the challenge is to create interesting content. The watchwords of good social media context – informal, personal, brief – are not ones with which asset managers traditionally feel comfortable. PERSONALITIES
YouTube videos featuring fund managers and other commentators provide a way both of avoiding the written word and of allowing individuals’ personalities to come across. But most social media advisers agree that a good blog is an essential component of a good social media strategy. “What managers need is a good home base with content that speaks about their business and explains in detail who they are and why they’re doing what they’re doing, and gives a personal dimension to their business,” says Berges. “A great place to keep that kind of content is a good blog, and that’s what is often missing.” For a good blog, you need a good blogger, and managers with a successful social media strategy have understood this. Pimco, which according to the 2012 MHP survey is the most followed asset manager, wields Bill Gross and Mohamed El-Erian to good effect. Franklin Templeton has put Mark Mobius centre-stage, while BNPP IP’s digital committee launched a blog for chief investment officer, William De Vijlder, in 2008 targeted at press contacts and clients met at conferences. “Blogs are very important in our social media strategy,” says Marteleur. “They give another point of view and allow us to speak in another way to the audience. To enlarge the community, we added a Twitter account for William De Vijlder, videos on YouTube, and enhanced his profile on LinkedIn.” To make blogs work, assets managers need to adopt a more informal and personal tone, says Forrest. Companies not fortunate enough to have a famous emerging markets investor who has a way with words on their pay roll need to deploy resources to get the right tone. “They need to translate asset management speak into social media speak,” says Forrest. It’s also worth remembering that the point of social media is to interact. Many asset managers have struggled with this, but recently dialogues and group discussions have started to gain ground, particularly on LinkedIn – the social media platform most used by asset managers. A good way to provoke interaction is to stray away from traditional investment topics. Silk Invest, for example, posts content about how societies, cultures and economies connect in the frontier markets where it invests. But of course interaction is two-way. It’s not enough to post content and get comments; responses to the comments are required. “Social media works best when individuals intervene on behalf of the company,” says Forrest. The trend is for more employees to intervene. “Historically, we’ve had a small number of individuals authorised to create content,” says Harrington. “However, we increasingly are finding the benefit in allowing more of our workforce to author or share content via their own social profiles.” Naturally, this throws up all kinds of new problems. Those related to regulation are perhaps exaggerated. Communications on social media simply require the same due diligence as other communications. As with other communications, training helps. Franklin Templeton, for example, has a formal social media policy, which all employees are trained to understand and provides supplementary training to employees who engage directly with social media. So does “a nimble compliance department”, says Forrest – particularly when it comes to Twitter. WHAT PEOPLE CARE ABOUT
But regulatory concerns can also drive asset managers towards new opportunities, according to Berges. “If you strip out speaking about your performance or other things that could be considered direct financial promotions, it forces managers to speak about the things that people really care about the most, such as why are they in business, what makes them interesting, why are their fund managers compelling?” Another potential issue is suitability of content for different markets and client groups. This can be circumvented to some extent by segmenting content. Franklin Templeton uses a combination of global, regional and local content within its social media program, while BNPP IP segments some content on its web page, sometimes publishing in a specific language or aiming at a specific country, and has a global Twitter account, as well as local accounts for some countries. “Depending on the topic, we find some content travels well across borders, while other subjects are specific to only one or two markets,” says Harrington. The truth is that social media is a new area, and people are learning by doing. The pitfalls are many, but the potential benefits are huge, particularly for an industry such as asset management that tends to be perceived as somewhat remote and dry. “We think that social media communications allow us to give a more accessible and transparent image,” says Marteleur. In the post-crisis world where there is so much disillusionment with financial services, this, surely, can only be a good thing for asset managers and clients alike. ©2013 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.