Your Mutual Fund Soon May Tweet Its Performance

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You know you're behind the times when even the technology shy-Warren Buffet has a Twitter account before you do.

Mutual fund companies are feeling the heat to get connected and stay connected with clients using social media. They are slowly making the move toward incorporating Facebook, Twitter, and LinkedIn as venues through which they can reach clients and prospective investors.

But as the saying goes: It's not easy to teach an old dog new tricks, or in the case of the mutual fund companies, it's less a stubborn canine than an entrenched financial services industry with trillions in assets under management and little incentive to change without being pushed.

Advisors who sell mutual funds are making the transition more rapidly than many mutual fund companies. At Bank of America Merrill Lynch's Wealth Management division, for example, advisors are anxious to take the social media plunge; they are viewing it as not just a requirement, but critical to future business survival.

"We think it's how investors will find everything," said John Thiel, Head of Merrill Lynch Wealth Management. The firm is currently rolling out a program that will allow all of its 15,000 financial advisors to use LinkedIn to connect with clients and prospective clients, and to provide content. The program works through a proprietary interface that allows BofaML to supervise its advisor activities in line with the regulatory requirements.

Currently, BofaML has a Twitter handle, which has 48,000 followers, and the firm's financial advisors have access to the account, but are not tweeting individually yet. That may soon change. "Our advisors are starting to be afraid of not having a presence out there in social media," Thiel said. "It's a generational thing, but our advisors think it will build their business. We are inching it out and trying to measure it and see its impact," he said. Merrill Lynch Wealth Management hasn't figured out a way to use Facebook as a tool yet, but the firm has posted content from its advisors on YouTube and iTunes.

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Jim MacDonald, president, Workplace Investing at Fidelity Investments, said that social media can be a useful tool for reaching clients, but conceded that the fund industry has been slow to adopt it. "Creating a social media presence is already a key goal of many people in the business world, but fund companies are slower in coming into the game," he said. Even though the big fund companies in the U.S. have large marketing and sales forces catering to the bricks-and-mortar advisor world, they are feeling the pressure to get on the social media bandwagon, and it's not bending to a fad, according to MacDonald, but preparing for a key demographic shift.

Many of Fidelity's clients are of a generation that has not yet tapped into Twitter or Facebook. "As the next generation starts its move to save for retirement and build up investment portfolios, using a Tweet to send key information may be the best way to reach them," MacDonald said.

Vanguard Group began experimenting with social media about five years ago. Social communication proved to be a good fit for the way Vanguard does business, and now the company has a strong presence on Facebook, Twitter, and Google . "We entered into the social media space and found that we had many clients there, and it was a way that we could reach them and provide education and have a discussion with them," said Shayna Beck, Senior Manager of retail communications at Vanguard. Vanguard's Facebook page has 124,000 fans.

The rules and regulations that apply to all other types of client communication apply to the social media space, but Beck said that as Vanguard's social media use has developed over time, it has been focused on education rather than recommendation. "There are no rules that say you can't give advice this way, but if you do, you have to develop an oversight program," she said. "We decided that we are more interested in providing an educational space through these channels, and if people want advice we will point them in the right direction and make it as easy as possible for them to get it from Vanguard," Beck added.

It's no surprise, though, that for a business founded on the handshake and in-person marketing pitch, Bank of America Merrill Lynch's wealth management division still believes that there is much mileage to be gained from face-to-face interaction. "We still want to meet a human being and build a relationship," Thiel said, adding the move to social media will just augment this practice.

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Patrick O'Connell, executive vice president, Ameriprise Advisor Group, said the move to social media as a communication tool is undeniable, but he is also a staunch believer in the power of interpersonal connections when dealing with clients. "Many people are interested in communicating through some sort of digital platform. However, I believe you still get the best outcomes when there is a face-to-face, personal meeting between an advisor and client. The conversations are deeper and it is easier to understand the emotions on both sides," he said.

Ameriprise allows its advisors to use Linkedin as a way to connect with clients and prospects. "We know this is one way clients want to communicate or reach out to advisors," O'Connell said. Overall, O'Connell views social media as one component in a broader digital environment that connects advisors and investors.

And the more things change, the more O'Connnell sticks to the belief that what has worked in the past hasn't fundamentally changed as a result of social media's rise. "The ways in which an advisor can interact with a client continues to change, but the conversations are the same as they always have been, with advice at the core."

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It's true the clients always want advice on their own terms, and that won't change, though the highly successful fund industry may want to invoke one of its own mantras when it comes to being reluctant on the social media trend: past performance is no guarantee of future results. That's a warning that also happens to be 140 characters or less.

_ By Leslie Kramer, Special to