Sometimes fear drives action – and maybe financial services firms are finally becoming engaged in social media because they’re afraid that if they don’t, they’ll get left behind. I’m fine with that – I don’t care why social media is finally catching on in the financial services industry – but it’s about time!

According to a recent Cerulli Associates report on trends in retail product and marketing, 79% of firms say that the main motivation for embracing social media is to increase brand recognition. Enriching communications was also sighted by more than 70% of the 50 firms interviewed as a primary driver of their increasing interest in social media.

Why are these numbers encouraging to me? First, unlike consumer products companies, for example, where increasing sales is a primary driver of social media, that goal is secondary in financial services. Being a service industry, increased sales – eventually – would be a nice by-product of social media. Of primary focus, however, should be brand awareness, client servicing and establishing credibility; social media is a great way to do this and to increase the stickiness of assets and solidify long-term client relationships.

Also encouraging from the study is that 47% of firms – up from 13% last year – are integrating their social media efforts into their overall marketing efforts and consider them to be a main component of these efforts. It’s not only enough to utilize social media – you must use it correctly. It should be integrated into other marketing efforts – not stand alone.

(As an aside, sizable increases were seen in the use of LinkedIn, Facebook and Twitter.)

Whatever your motivation, or whatever segment of the industry you are involved in, their are invaluable uses for social media – if utilized correctly. There’s no time like the present!

When advisors select an asset manager/fund family, what factors do they consider to be the most important? According to a recent study by Cerulli Associates, a well-respected industry research firm, client service comes in at first, with 51% saying that it has a major impact on their selection, and tied for second, with 34% of advisors each, is a firm’s website and their brand. Music to the ears of those of us who have been preaching this for years.

While this study focuses on the advisor/manager relationship, I don’t think it’s too much of a stretch to think that the results would be similar if clients were asked why they selected advisors. Recognizable names and brands go a long way in establishing credibility in our post-financial crisis world. The trick is to provide consistent messaging over a period of time to help build-up brand awareness – and then to deliver on your promises via excellent client service.

As we have stressed over the past month or so, if 2013 proves to be as bumpy as we think it will be, ensuring that you keep your current book of business satisfied will be one important key to at least maintaining your business. Building and maintaining your credibility via your messaging and servicing will also position you well for the future, regardless of what the economy is doing.

Importantly for small- to medium sized firms, developing and maintaining a brand – through your website, messaging and marketing efforts – is a lot less expense than advertising. Unless your the size of a Fidelity or Putnam or Schwab, for example, advertising can be prohibitively expensive. Developing a brand, a website and a plan to deliver your services consistently, is a lot more doable.

So listen to what the marketplace is telling you – trust is important – and part of being able to trust a potential partner is to receive reliable and consistent information from them – from their website and client servicing efforts – and to be able to rely upon them – via a recognizable and quality brand.