The Journal of Financial Planning cover story, written by Ed McCarthy, is a high-level roundup of different methods for building client-centered advisor web sites. It explains the difference between having a “brochure” site and building a more interactive site that gives clients a reason to come back. It also discusses various methods advisors can use to create good web sites, ranging from outsourcing to doing it yourself.

The article is partly a review of Advisor Products‘ new feature set which includes numerous client-facing tools. But it also contains a lot of good general purpose information about building advisor web sites. He breaks out different advisor sites by “level” and talks about the different things advisors can accomplish by taking different approaches to creating their firm’s web site.

From the article:

A Level 1 site is the previously mentioned online brochure or billboard. It has static content and contains information that would be included in a printed brochure. He believes that approach is useful to a point. But if it’s all the firm offers, then once someone becomes a client, the site becomes largely useless to them. He also believes it becomes a lost opportunity for ongoing communication.

With a Level 2 Web site, the advisor begins to add content beyond information about the firm. This content may include articles the planner has written or has the right to reproduce, such as articles related to financial planning and investment topics. Yeske believes the key is not to just have content but to have content that’s fresh and regularly updated or expanded.

Level 3 sites, accomplish several goals that less sophisticated sites do not. First, they foster advisor-client interaction by enabling two-way communication. In other words, the site moves from providing only advisor-to-client contact to allowing client-to-advisor communication. This can be done with click-to-e-mail icons, Web-based communications forms, or threaded discussions, all of which Yeske says are easy to implement. Level 3 sites also facilitate interaction by including private, password-protected pages where planners can share information that is specific to each individual client. Yeske uses these pages on his site to post portfolio reports and updates to clients’ financial planning projections.

McCarthy discusses several different ways advisors can go about building client-facing sites, and argues strongly for “Level 3″ functionality, which introduces two-way communication between the advisors and their clients, in the form of blog comments and threaded discussion forums. He points it that it may be a bit ahead of the curve, but we are only a few years away from clients expecting to see blogs and forums on their advisor’s web site.

McCarthy includes a quote from Gluck that best illustrates why:

“With all of the products we’ve rolled out over the past 12 years that we’ve been in the advisor Web site business, we’ve had to lead advisors into them,” [Gluck] says. “When we did the first e-mail newsletter in 2000 or 2001, advisors didn’t have e-mail newsletters back then and people asked me the same question: “Do you think advisors will want to communicate like that?” Now the advisors using our e-mail newsletter have great success with it. The forum thing may be three years out before it catches on, but the content personalization stuff, we’re here—people need it now.”

I strongly agree with the sentiment in regards to blogging–in fact, WealthFly readers are probably sick of hearing me talk about it. But I’m not so sure about interactive forums. All of the interactive forums that I’ve used are technical support forums. Software companies attempt to route all technical support through their online forums to create a de facto online database of technical support problems.

The investment advisor->client relationship is much more personal and private. There’s no inherent advantage to having a centralized data store because many issues with a particular client aren’t transferable to other clients. A client can’t ask “why was my rate of return so low for Asset X” because the client doesn’t want that type of information to be viewable to other clients.

Moving on, I’ll post a chilling quote from the Journal article by Paul Tolley, the chief compliance officer of Commonwealth. Tolley questions whether advisors can post information on public blogs.

“Blogs in and of themselves are extremely complicated to supervise and principal-approve,” he says. “The blog is not correspondence—a blog is advertising. You cannot control the audience. And to the extent that the content requires filing, heaven help you if you start getting into discussions that would trigger the filing requirements because you can’t possibly do that with a blog. I would be shocked if any broker/dealer out there were permitting blogs to be used—knowingly, anyway. And frankly, I’d be surprised if firms allowed them on the advisor side.”

I’ve been worried about the blogging compliance issue for some time. If broker/dealers clamp down on all of the Web 2.0 interactivity for compliance reasons, the advisor blogging revolution could be very short lived.

Gluck posted a partial response to this in a WealthFly comment thread:

Advisor blogs should be moderated. Before any comment goes live, it must be reviewed and approved by your compliance officer. That’s how all of my company’s (www.advisorproducts.com) blogs work. If someone posts a comment that is offensive or that might break any compliance rules, you delete the comment. If a client posts what may be construed as a testimonial, you may want to not allow the comment to go live.

That’s helpful but doesn’t address the general issue of controlling your audience for a blog. Compliance issues are (thankfully) far from my area of expertise but common sense seems to backup the Commonwealth stance–advisors and brokers can’t blog unless they are registered in all 50 states. So if you’re thinking about starting a blog make sure you’ve passed your Series 63.

Monday, I’ll post Part II where I’ll expand on McCarthy’s ideas for do-it-yourself web sites.