On May 4, the Securities and Exchange Commission’s (SEC) updated marketing rule (Rule 206(4)-1) took effect. When the SEC first proposed the rule back in 2019, we wrote a brief post about what, if accepted, this would mean for marketing to and communicating with current and prospective clients.
In short: it means a lot.
The barriers that once handcuffed maximizing marketing efforts have come down. The cryptic rules developed in the 1960s and 70s have been consolidated into one digestible and principles-based regulation. Oh, and the most important part: rankings, endorsements, and testimonials are fair game!
Why the exclamation? Two words: social and media. If you are not an avid user of Twitter, LinkedIn, Facebook, Instagram, and the like, that’s understandable. But you can bet the bank that your clients, prospective clients, and especially the younger cohort of your prospective clients do. It’s where they go to research products and services before making a purchasing decision. The content you share, the content that others share about you, who engages with it and how, all tells a story – a story about credibility.
The concept is called social proofing, or informational social influence. When people see others having frequent, positive engagements with your brand, they assume it’s representative of your service. It’s not a new concept by any means. While on vacation you may have walked by a busy restaurant noticing the food and patrons having a good time, and then felt the sudden urge to want to try it. It’s the same thing, but online.
Word of mouth, only crowdsourced
- 54% of social media users use social media to research products and services
- 71% are more likely to purchase products and services based on social media referrals
- 81% of consumers’ purchasing choices are influenced by their friends’ posts on social media
Manage your online reputation
The marketing rule update will force advisors to take a crash course in what it’s like to market a business in the 21st century. Eighty-one percent of consumers conduct online research before making big purchasing decisions. If you don’t have a digital/social media footprint and your website looks archaic, it’s safe to assume that is how you will be perceived in the marketplace.
In this new world, every review, comment, mention, engagement on social media is important. A frequent saying we hear among our clients is “you can’t manage what you can’t measure.” The same can be said in the context of digital and social marketing.
What advisors should do
- Make a lasting first impression: If your website is 10 years old (or you don’t have one) it’s time for an update.
- Content isn’t king, it’s the kingdom: Develop timely, engaging content that will be interesting or educational to your audience. It can reside on your website blog and fill social media channels.
- Do your research: Find out what institutions and individuals carry weight among your audience. Connect with them and encourage engagement.
- Don’t let up: Consistency is the name of the game. Finding the time to publish that blog or review your social media channels can be tough given the job, vacations, client emergencies, etc., but it gets easier with time. Who knows, maybe after a while blogging and engaging on social media will be fun!
