Social media in the financial services industry, progress of sorts

Photo credit: Jim Yi

Last week, financial services giant, Morgan Stanley announced that it will allow its legion of financial advisors to communicate with customers via social media channels, Twitter and LinkedIn. There was a very notable condition, however; the messages they share on these channels must be taken from a list of pre-approved content.

This drew a fair bit of scorn from social media pundits in the press. By restricting its staff’s use of LinkedIn and Twitter in such a heavy handed way, surely Morgan Stanley had completely missed the point of social media and the whole exercise was a massive misstep?

The problem with this viewpoint is that it ignores the extremely difficult environment that financial services organisations operate in. Their business is both heavily regulated and highly politicised – everything they say and do in the public arena is subject to close scrutiny by analysts, the media and industry regulators. Mistakes are expensive, both in terms of money and reputation.

You can’t blame them for being cautious.

I recently gave a presentation on the current state of social media to a group of financial services marketing executives at the City of London Club with the FSDC, and the feedback from the group will sound familiar to anybody who’s done any kind of social media activity in the financial services industry.

They do, of course, understand that social media presents a massive opportunity and that it requires a new way of thinking about marketing and comms, and most of them would absolutely love to get their teeth into some social activity. The problem is that, in their highly risk averse industry, few organisations are willing to make the first move into what is a relatively unknown area for them.

So while this announcement from Morgan Stanley may seem insignificant and even ridiculous to some social media commenters, in the financial services industry it represents a very important first move. Others in the financial services industry will be watching closely, and eventually we’ll see more of them being willing to participate and experiment in social media marketing.

Not everything happens at the speed of light, especially not for financial giants which have taken a century or more to build their businesses.  We should be applauding Morgan Stanley, not mocking.

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