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The future of financial services at the Social Business Innovation Summit

05.19.2014
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Celebrating innovation, technology and social business, Hearsay Social last week hosted its second annual Social Business Innovation Summit in San Francisco, bringing together executives and thought leaders from across the financial services and technology industries.

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The Social Business Innovation Summit brought together the greatest minds across financial services and technology. Clockwise from top left: John Taft (CEO of RBC Wealth Management – US), Silicon Valley CEOs (from FutureAdvisor, Braintree, and Prosper), Bryan Schreier (General Partner at Sequoia Capital), Clara Shih (CEO of Hearsay Social), and Eileen McDonnell (Chairman, President & CEO, Penn Mutual).

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Hearsay Social President and COO Michael Lock with CEO Clara Shih.

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Clara Shih, Lee M. Gammill, Jr. (Retired Vice Chairman, New York Life, and Advisor to Hearsay Social), and others at breakfast.

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In attendance were CEOs, heads of sales and distribution, CMOs, and compliance officers, who packed Dogpatch Studios on Thursday morning to network, learn and understand the trends and themes that are guiding how people buy products and services as well as the opportunities and challenges driving financial firms to adapt.

Inspired by the rapid-fire, rousing talks given at TED conferences, the Summit provided those in attendance–and anyone following our Twitter hashtag #SBIS14–a front row seat into the future of technology and innovation and how businesses will survive and thrive.

See below for photos, tweets, and four key takeaways from the Summit.

Social media is about enhancing human capital, not replacing it

Kicking off the Summit, Hearsay Social CEO Clara Shih (@clarashih) shared how client expectations are changing, and technology is altering how consumers make buying decisions. Online sources today are key influencers in each purchase and consumers are conditioned to expect personalized service and an ability to communicate with brand on their own terms and with their own devices.

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Faced with an aging advisor population, the firms of tomorrow need to prepare to serve the next generation of investors and provide the tools to recruit the talent that will serve them. Technology scales and offers the ability to serve those previously unreachable, as it challenges and redefines existing models.

Client expectations are changing, and technology is altering how consumers make buying decisions. Online sources today are key influencers in purchases. Additionally, consumers are conditioned to expect personalized service and an ability to communicate with brands on their own terms, with their own devices, through their own channels.

Chris Andrews (Managing Director, Northwestern Mutual) and Karen Kehr (Financial Advisor, Ameriprise Financial) shared how they are using social media to grow, maintain and serve their base of clients in this new climate. Key to their success was the realization that many of their clients were already using social media platforms to network and connect. A personal and professional presence was a natural extension of their existing platform use, allowing them to convert friends into clients and find new opportunities through organic referrals.

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Chris Andrews (Managing Director, Northwestern Mutual) and Karen Kehr (Financial Advisor, Ameriprise Financial) in a conversation with Gary Liu (VP Marketing, Hearsay Social).

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Eileen McDonnell (Chairman, President & CEO, Penn Mutual) in a fireside chat with Hearsay Social CEO Clara Shih.

Establish a culture of innovation

Founded in 1847 in Philadelphia, Penn Mutual has seen its share of changes, and according to Eileen McDonnell (Chairman, President & CEO, Penn Mutual), the industry is in crisis. By the year 2020, over half of the workforce will be comprised of millennials, and financial institutions need to find a way to connect and add value to these consumers. The changing face of insurance means that firms need to broaden their reach to capture new talent, especially women and millennials.

This means firms need to employ tactical initiatives to address the change by choosing the right partners, embracing innovation, and stop making excuses.

“It’s not an either/or situation. People retreat to what is comfortable to them. It will tweak…but I do believe that there will be a next generation of advisor force that will operate very differently, and they will need to co-exist.” — Eileen McDonnell, Penn Mutual

Although Eileen admits that not everyone will be open to change, the next decade will show us new producers, as well as established ones co-existing to serve the market.

Embrace social influence with a human touch

On the advisor panel, Karen Kehr shared how she uses Facebook and LinkedIn to build brand awareness and connect with the multi-generational clients she serves. Through social media, she is able to connect on a personal basis with clients, getting to know their kids and grandkids, which makes the transition to new relationships and business easy.

Chris had a similar experience: recognizing that the financial services business is about high trust relationships, he understood that the ability to relate and share in similar circles makes it easier to grow a book of business based on commonality. Long gone are the days of using the phone to connect with new prospects and expect any kind of exchange, especially when people are avoiding their phones or not using them at all.

“The old models of calling people worked in the 1950s. The 40-calls-a-day model is now broken.  There is a lot of power in social, lots of information, and we need to keep it personal.” — Chris Andrews, Northwestern Mutual

Social doesn’t just help grow new business, but it also helps retain existing business. People will continue to work with advisors they trust and can relate to, and social makes it easier for people to understand who you are on a personal and professional level. It reduces the intimidation that one may feel working with a financial professional and makes clients feel comfortable and connected.

The dial-and-smile mentality is broken and no longer addresses how clients are making buying decisions. Karen concluded: “If you don’t have a presence, you don’t count.”

Joe Fernandez (CEO and founder of Klout, @JoeFernandez), whose software measures social influence and explores how people buy products and services, expanded on this idea during his presentation.

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Joe Fernandez (CEO and founder of Klout) tells the story behind Klout and the meaning of social influence.

People today don’t pay attention to ads or billboards like they used to, and consumers are using information from peers to differentiate and select products. We listen to our friends, not brands.

“84% of millennial say user-generated content influences what they buy.” — Joe Fernandez, Klout

The leverage and reach provided by social media has increased the power consumers have over brands to influence the perception of products and services. In the post-advertising world, we only care what our friends say, and the power shifts back to consumers. If you don’t recognize the power of the people, you are missing an opportunity.

As an example of one platform that empowers both individuals and brands, Ralf VonSosen (Head of Marketing for Sales Solutions from LinkedIn, @rvonsosen) shared how LinkedIn is helping professionals connect with current and prospective clients, making them more productive and successful.

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Ralf VonSosen (Head of Marketing for Sales Solutions from LinkedIn) talks the future of social networks.

In total, LinkedIn has over 300 million global members representing 300,000 jobs and billions of updates on a daily basis. They have built their platform to focus on three main areas:

  1. Identity: The resume is not as important as it once was when you can now use a digital resume that brings to life your professional background and the ability to create an online brand.
  2. Networks: LinkedIn continues to expand the growth of the network and talent pool available on a global basis.
  3. Knowledge: LinkedIn is quickly expanding as the definitive professional publishing platform, as evidenced by its acquisition of SlideShare, the growth of Groups and Pulse, and the expansion of its Influencer program.

At a high level, LinkedIn continues to define the role it plays in providing value to its members and continues to develop the platform to serve as an Economic Graph–a digital representation of the economy by connecting talent with opportunity at a massive scale and creating a capital of talent.

“The vision is to digitize this and then leverage this capital to where it can be more productive.” — Ralf VonSosen, LinkedIn

For users, this can only increase the value that LinkedIn provides its members, whether they are looking for job, a connection or new talent.

Resist naysayers and embrace disruption

Tapping into its Silicon Valley network, Hearsay Social was proud to present a unique panel of entrepreneurs–Bill Ready (CEO, Braintree, @williamready), Aaron Vermut (CEO, Prosper, @vermooti), and Bo Lu (CEO and founder, FutureAdvisor, @bolu)–who joined the Summit to share their views on entrepreneurship, technology trends in financial services, and how to succeed in the digital era. The panel was moderated by Amir Efrati (Senior Reporter, The Information, @amir).

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Bo Lu (CEO and founder, FutureAdvisor), Bill Ready (CEO, Braintree), and Aaron Vermut (CEO, Prosper), share their view of financial services innovation with moderator Amir Efrati (Senior Reporter, The Information).

Although each business is focused on a unique value proposition, they each share a common theme: disruption.

Whether it’s addressing the underserved masses with financial advisory services, micro-lending opportunities or new payment options, each company is challenging existing business models with ones that are meant to improve efficiencies and client experiences.

This is not unlike what social media is doing in financial services. It would be easy for advisors and firms to ignore the benefits of social media and hide behind the excuse of regulatory or compliance concerns.  As the panel of entrepreneurs pointed out, however, the changing consumer base is wired differently, and technology is making it easier to disrupt existing systems that have yet to evolve, echoing some of the same sentiments shared by Joe Fernandez of Klout and Chris Andrews from Northwestern Mutual.

John Taft (CEO of RBC Wealth Management — US) provided a different perspective on the disruptive challenge these new companies are creating. Like Eileen before him, John recognizes that the next generation investor’s mindset is different and that more established brick and mortar businesses need to adapt to serve this new consumer. But it won’t happen overnight. And not all consumers are the same.

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John Taft (CEO of RBC Wealth Management — US) in a fireside chat with Hearsay Social CEO Clara Shih.

Financial services continues to be a high trust, high touch business that demands a personal relationship. The average age of clients is in the mid-50s and their advisors are about the same. Businesses have been built around the trust that advisors gain through personal connections established at local golf clubs, associations and common interest groups. RBC Wealth Management – US, although progressive in its approach to social, is not looking to address the unseen client market. That being said, they are looking to explore the effect that digital technology is having on wealth management.

John challenged the notion that younger generations don’t like or use the phone because it’s really a matter of where you are in your life cycle. Life gets more complicated as you age, as do your needs. Professional advice is a premium and, the more complicated your life gets, the greater the need to have someone help you navigate through the tough decisions.

To this end, technology is both part of the problem and the solution. Although consumers today have access to more information and are perhaps more confident to make decisions on their own, it’s still a relationship business. Social media provides the avenue for shared values and ideas that ultimately make it easier for people to select the financial professional who is right for them.

Bryan Schreier (General Partner at Sequoia Capital, @schreier) agrees with John that Generation Y is unlikely to abandon their phones once their lives get more complicated.

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In the last session of the day, Bryan Schreier (General Partner at Sequoia Capital) and Hearsay Social CEO Clara Shih discuss the next decade of Silicon Valley with Adam Lashinsky (Senior Editor at Large, Fortune).

Sequoia Capital spends a lot of time listening to college-aged consumers. What they’ve discovered is that this generation has a “lean back” mentality and prefers to see things in their social streams. They are very willing to share — by taking photos, using Snapchat and sharing online. However, they also expect the brands and services to come to them–an important lesson in the high touch and high trust environment of financial services.

Today, in the age of information, strong relationship management matters, and those that embrace technology to scale both new opportunities and maintain existing relationships will have success. There is a premium in offering personal attention and nothing beats face-to-face; in fact, that’s why we hosted the Innovation Summit in San Francisco, not online via a Web connection.

We’d like to thank all of our clients, partners, speakers and panel members for joining us in San Francisco.  And thank you to all of those who joined us on Twitter using hashtag #SBIS14, as well as the Hearsay Social team who made it happen.

Yes! That’s why I came to #SBIS14 RT @TracyFine: There is true value to bringing people together face-to-face. #SBIS14 @clarashih

— Joanne (@jokosworld) May 8, 2014

Published at DZone with permission of Hearsay Social, author and DZone MVB.

(Note: Opinions expressed in this article and its replies are the opinions of their respective authors and not those of DZone, Inc.)