Thursday, March 3, 2011

I Like Rules

I like rules and regulations. I like regulations that keep corporations honest and keep them from screwing over the little guy. But that’s not the only reason to like rules. I don’t like rules just because I’m an INTJ or because I was exposed to Catholicism at a young age—I like them because they’re healthy—not just for puppy dogs and children but also for the financial services industry. And yes, I work for a fee-only investment advisor but I don’t think this is simply the result of me having a few too many glasses of the kool-aid.

There have been studies done that prove that the financial services industry is actually healthier when it is regulated. (Because this is a blog post and not a paper I’m going to be lazy, but I bet you could find one with the Google and 5 minutes.) I believe this and I like to think that I believe it because it’s true and it makes sense to me and not just because I wish it were true. I feel that rules and regulations offer a framework on which people can build in the way a trellis offers a supporting framework for ivy.

I spent today at a conference in Cambridge. I don’t go to many conferences for a number of reasons (they don’t have many for IT professionals in my industry for starters). So this was a bit of a treat for me. My professional niche— technology for the independent investment adviser—is both small and dorky. This conference was on technology and practice management, so it was a pleasant opportunity for me to be myself, professionally.

The real “aha” moment for me was during an afternoon session on social media. I did not plan on attending this session. I have until now intentionally avoided “social media for business” for several reasons. For starters, it’s marketing, which I avoid like the plague. For another reason, the regulations in financial services about marketing are draconian (no testimonials-so no one can recommend you on Linked In, no giving advice in your advertisements, no saying that you’re a “successful” practice) so the general impression I’ve gotten on social media for financial advisers is “Don’t.”

But at the same time, all the industry press I’ve been reading has been pro-social media. Why would all these financial industry journalists keep telling us to go forth and “fan” ourselves on facebook if they all knew there were compliance reasons why we couldn’t do so? Furthermore, if the inter-webs are really changing to the point where everything is happening on facebook, we (the investment advisory world) can’t just keep saying we don’t do that because it’s against our religion. At the very least I decided today that *I* would not be the one telling my employers no, we can’t do this thing for compliance reasons.

I had intended to attend a different afternoon session, but the idea of sitting through yet another discussion of software integration (“Folks, just so you know what an API is…”) and planning your technology decisions strategically made me want to curl up and take a nap*. So I found my boss and told him that I was going to the social media session.

I knew I had made the right decision when I saw that one of the panelists was a compliance attorney—this was not just a couple of internet fan-boys and fan-girls telling you how you need to be all Web 2.0 ‘n stuff. The panelists talked about how while there weren’t regulations in place for investment advisers yet, there was a regulation for a related industry that spelled out what the rules were likely to be. There were software offerings that would allow investment advisers to participate in social media, while adhering to industry compliance regulations.**

Hearing these things caused me to have a thought-gasm. Suddenly I could see *exactly* what I could do to help build a social media program for my employers (or for any registered investment adviser.) Once I knew that someone had given some thought to what the rules were likely to be it took me about 5 seconds to come up with a social-media marketing plan for my employers. And this is why I like rules.

Is my instant plan perfect? No—but it is a prototype that can be developed. Will they adopt my plan? Will I even get to be the person that advises them on the use of social media? Probably not. But that doesn’t chance how nice it was to have a framework that allowed me to see and understand.

*. It’s not that I don’t find the subject matter interesting; it’s just that I could give the presentation at this point in time. I know why your CRM (or “sea-arm” as one guy kept calling it) should be integrated with your Portfolio Management System, your Document Management System as well as your Financial Planning Software. I know why you should use an Account Aggregation System and Rebalancing Software. I also know the extent to which the integration that all these vendors are going on about does or does not work. (Yes, there’s integration—unfortunately it only imports fields we don’t use.) Furthermore, I also know that me knowing these things (and explaining them—sometimes while jumping up and down and waving my arms) has not lead to them being fully adopted by my employers.

**The biggies I mentioned above-no testimonials, no investment advice, but the “books and records” portion of the regulation requires that you save all your advertising—so if you have a twitter feed you must archive every tweet.

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