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Funds Should Become Fans of Social Media


WASHINGTON-Asset management firms must have a presence on social media if they want to remain relevant to financial advisers and investors, according to speakers on the Investment Company Institute's "Using Social Media in Fund Communications" panel during its 2011 General Membership Meeting here.

But while asset management firms may not have as great a following as some participants on social media-such as the Coca-Cola Fan Page with 21 million "likes" on Facebook-that could feasibly happen in the future.

"We wish our postings would go viral and we could be like Lady Gaga and Ashton Kutcher," said Amy Dobra, a principal with Vanguard. "We can't all be like Charlie Sheen with his #winning hashtag. But social media, even for asset management firms, is for real."

Facebook has 500 million users around the world, noted Alexander Gavis, vice president and associate general counsel at Fidelity Investments. And Fidelity, which launched its Facebook page in February 2010, is "liked" by 13,071 fans at this point.

But while social media is currently dominated by a few large players, namely YouTube, Twitter and Facebook, social media outlets will probably continue to expand as more people access information on mobile devices.

Eventually, Gavis predicted, mobile devices will replace desktop computers and social media will become a predominant form of communication.

A survey of the members of ICI's communications committee in 2008 found that only 13% were using social media in 2008, Gavis said. In 2010, that rose to 45%. Today, 60% have a social media strategy.

Vanguard, which now has 18,122 fans on Facebook and 5,594 followers on Twitter, started using social media three years ago.

Senior Vanguard executives noted that the purpose of social media aligns directly with Vanguard's word-of-mouth approach to marketing its funds.

"It's a perfect complement to our strategy of 'plain talk' investing," Dobra said. Vanguard started with just a blog written by its investment professionals, Dobra noted.

The firm then began allowing investors to post comments after first reviewing them. "We were surprised by how really thoughtful and rich they were," Dobra said. "Once we started publishing them, we found we really were connecting with our readers."

Facebook in particular, Dobra said, "is about community and two-way communication. It's a good idea to ask followers questions, such as about investing."

The best way to make use of Facebook, Dobra said, is to focus on "engagement and to post information on how to be better investors."

For other asset managers considering making use of social media but unsure of how to make their firm stand out from competitors, Dobra advised, "think about your firm's individual corporate culture and the thought leadership of your experts."

Social media has replaced talking around kitchen tables, Dobra added.

At U.S. Global Investors, CEO and CIO Frank Holmes decided three years ago that the firm would have a presence on Facebook and Twitter, noted Susan B. McGee, president and general counsel at the firm.

"Why are we on social media?" McGee asked rhetorically. "Our CEO handed down the edict and said, 'We are going on Facebook and we are going to tweet.'"

U.S. Global Investors decided to use social media to post educational materials on its gold and emerging markets funds, McGee said.

As a relatively small boutique with 13 mutual funds with $2.85 billion in assets under management, U.S. Global Investors recognized social media as an opportunity to get its name out and expand its brand recognition, she said.

The firm then added Holmes blog, "Frank Talk," she said. Since then, U.S. Global Investors has attracted 1,410 followers on Twitter, 449 people have said they "like" the firm on Facebook, and Holmes' blog not only gets 10,000 hits a month but 45 financial advisers post a link to Holmes' blog on their homepages, she noted.

Legg Mason uses social media to connect with advisers, the media and investors, said Mary Athridge, director of corporate communications at the firm. Since Legg Mason sells exclusively through advisers, it developed a value-added educational program on how they themselves can use social media, called "Client Acquisition in a Wired World."

While Legg Mason currently does not allow commentaries, the firm its working with its compliance team to create two-way communications on the nine portals it built using Web 2.0 technology.

Vanguard's Dobra said it's a good idea to post several times a day to Twitter. "Most people use Twitter like a news feed, she said. For many people, Twitter has replaced their consumption of traditional publications," Dobra said. "We started only a few times a week. Now we issue six to 12 tweets a day so that we are not knocked out of readers' feeds."