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Vanguard, Fidelity Rated Highly in Social Media

Making content about their funds interactive and encouraging back-and-forth communication with customers earned Vanguard, Fidelity Investments, TIAA-CREF, BlackRock's iShares and The Hartford the top scores in Kasina's rating of asset management firm's use of social media.

"These firms are all doing two-way communication. They are not just pushing content out at recipients," said Eric Daugherty, a principal and director of research at Kasina. "Secondly, they are focused on high-quality content. They are not just throwing anything out there to be in the social media space. These top five are really out in front of the pack."

The Kasina Social Media Index weighting, based on a score of zero to 100, is based on the Kasina's assessment of 45 asset management companies' presence in five social media outlets: Facebook, Twitter, blogs, LinkedIn and YouTube. The rating system also judges how effectively an asset management firm integrates its message into the typical characteristics of these outlets.

Fidelity and Vanguard were the only two firms to be rated Best in Class, with each scoring an average of 80 (see chart). TIAA-CREF earned a score of 79. iShares earned a score of 78, and The Hartford earned a score of 77.

Those companies receiving a score of 80 to 100 are considered Best in Class; between 70 and 79, Above Average; 60 to 69 Average; and 0 to 59, Sub-Standard.

These five companies rated far higher than the average 56 score, Daugherty noted. Eleven companies got Average scores, and 26 get Sub-Standard scores.

So what are the five leading companies doing right?

"We see Vanguard excelling in two particular areas," Daugherty said. "One is fostering a personal connection with investors. Their YouTube channel is a good example of that, where they feature a spokesperson named Bonnie who speaks colloquially to people. They also tape employees of Vanguard along with their spouses talking about how they handle their finances. They really personalize the message and allow people to feel as if they have a personal connection with Vanguard."

Indeed, Vanguard posts several videos on YouTube each week, each educating investors about their personal finance, such as recent videos that discuss "How to Consolidate Your Retirement Accounts," "How to Create a Withdrawal Plan," and "How to Purchase an Annuity."

Kasina also gave high marks to Vanguard for its blog. Its commentators "really excel with the quality of the content," Daugherty said. "Although they have five senior people blogging, the brand and imaging is very consistent. It's simple in design but really rich in content and very on-point since they are talking about the markets, the economy, investing and retirement planning, personal finance and taxes."

Although Fidelity doesn't have a blog, the company excels at Facebook and Twitter, Daugherty said. "They are consistent with their tone as well. It's clearly a Fidelity brand. Their content is outstanding."

Fidelity's Facebook page also tries to engage investors by asking questions. One recent post from Fidelity said, "8 out of 10 college grads are leaving campus with an average debt amount of $40,000. What words of wisdom with you share with teens who are preparing for the cost of college?"

Another: "How do you think China's economy will affect the global market?"

Fidelity also uses Twitter to post managers' views on the markets and the economy and to educate investors about saving.

Two recent Twitter posts from Fidelity were "Got a #401(k) or #403(b) that's hanging in limbo? We review the pros and cons of each option," and "Could the slowdown in #China's #economy serve as a wildcard for the financial markets?"

"One thing we like about TIAA-CREF is that they inform and engage investors without being intrusive, particularly on Facebook," Daugherty said. "They accept no advertising on their page and present a very clean, polished look."

Two of TIAA-CREF's recent posts on Facebook were: "Learn how not to run out of money in retirement by viewing this next video in our 'how to' series" and "The first quarter of 2011 began with relative calm and ended amid turbulence and shocks to the system in March, according to our senior economist Brett Hammond. Read his outlook for the rest of the year."

Kasina particularly likes iShares' blog, Daugherty said. Some of iShares' recent blog postings have included "What's Eating You? Global Inflation and Your Portfolio," "Central Banks and Gold: Still Net Buyers" and "Cause or Effect: ETF Trading Volume on Volatility (and Vice Versa)."

Daugherty called these and other postings very "robust" and said Kasina was also very impressed with the overall look of iShares' blog.

The Hartford's social media excels as creating a sense of "true community," Daugherty said. "They bring their own employees and investors into the conversation to communicate with one another. They post pictures on their Facebook page of employees and also that employees have taken. The Hartford also does a great job of highlighting partnerships with other organizations, such as the blog they post with AARP, called 'In the Driver's Seat.'"

As for the social media efforts of the 40 other companies that Kasina considered, the content was far inferior, Daugherty said. But he expects improvement.

"It's still early for asset management firms to be on social media. They're still in varying degrees of evolution," Daugherty said.