While the investment industry virtually invented the online networking world, security and compliance issues have made it slower to adapt to the alternative social media. In no other industry do individuals work harder at following the crowd, or top traders. The meteoric rise of Yahoo stock during the Internet boom showed us the power of online aggregation.
Today, social media such as Twitter and Facebook is quickly eclipsing Yahoo’s online boards, which once reigned as the place where online gossip could make or break a company in a click of a mouse. Companies quickly learned how to play the online messaging board game with damage control and management of reputations.
Given the high risks, the question is, do you want to play the online social networking game? Social networks that allow contacts to mirror your trades are among the higher risk services being offered. An unhappy investor can infect many people in a short amount of time with very little effort. At the same time, wrong investment advice is more quickly disseminated and it can be a full time job screening who is contributing to your site. You must choose your social networking vehicles carefully.
Undoubtedly, there are risks and a significant investment of time. This investment is not without its returns however, and one might ask instead, can you afford not to play? Leading investment advisors report that they are driving more sales and traffic through social networking than traditional online sites. Investment services and social networking sites are adding a plethora of new social media tools to enhance the investment experience. A big plus of setting up your own network is that you have more control over the user experience and what type of people you network with online.
Clearly, you need to have a social media presence. You just need to focus on how to protect your online reputation and ensure compliance. The best advice the experts have to offer is to add contacts and accept recommendations only from those you know and trust. Ensure the forums on your social networking site are well monitored and maintained at a professional level. Leading networking sites, for example, have recently been maligned for allowing the quality of discussions to deteriorate and for allowing too much infighting.
The competition to be the next Facebook of mutual funds is intense and a lot of new players are emerging. A number of leading sites have faced their own reputation issues as they have struggled to maintain the quality of information on their sites.
Following the crowd does not always work in the social media world. These fallen social media darlings are a reminder of how important it is to invest BIG in managing your online reputation.