Lauren Boyman, director of content and social media at Morgan Stanley Smith Barney, said during a recent presentation that her company spent the past nine months to a year figuring out how to allow its financial advisors to use social networks in a compliant way. After they figured out how to do it, the next question was what they were going to say.

 "That's a much more difficult question to answer. What is social dialogue? How can we take the Morgan Stanley voice and translate that to a social environment?" she asked.

The company decided to start with five topic areas: research and strategy, wealth management, engagement, communications and branding and lifestyle. Morgan Stanley has taken a very conservative approach to social media, having its management and marketing teams develop the messages they want their advisors to disseminate through various social media channels.

The industry has "made great strides over the last year. It will only accelerate in 2012. Part of the reason this is accelerating is people are getting comfortable with the regulations," Bockius said.

The biggest is FINRA Regulatory Notice 10-06, which was released in 2010. It laid the groundwork for how financial companies could make use of blogs, electronic forums and social media sites, like Facebook and Twitter.  It also put social media on its enforcement compliance list.

Companies that want to utilize social media to enhance their business dealings first must devise a policy. "There are a lot of industry best practices to help accelerate your definition of a policy," he said. Every regulator has been clear about the second point, which is you can't just have a policy you must train against the policy, ensuring individuals in your organization understand the specifics and understand how to deal with regulatory issues as it relates to any new media."

Businesses also must find a way to archive 100 percent of their social media content. If a firm is audited, FINRA will expect to be able to monitor all communications that have taken place via social networks. Companies must think about what activities are off limits and what are on limits. "It is not enough to focus on content. You need to focus on actions," Bockius said.

There also needs to be supervision. Businesses should be asking what content needs to be reviewed in advance and reviewed after it is posted and how that process can be streamlined so it doesn't bog down the system, he said.

Since 2010 and 2011 were mostly about compliance, 2012 will be about participation, he said. "Firms in a state of prohibition are losing value every day. They are losing opportunities to engage with clients and prospects, to hire that next great advisor or they may have lost an advisor because the firm doesn't support social media," he said.

It takes time to develop a presence through social media. "Simply having a presence on social networks does not create value," Bockius said. …"The firms that unlock the most value are the firms that take a step back and figure out how to integrate social into that and what technology they need to tap into that."

Eighty percent of advisors say they currently employ social networks for business and 10 percent plan to use them in the future, said Christie Campbell, director of marketing at Socialware.  The company also found that 60 percent of advisors said social media had a positive business impact, 34 percent said it generated new prospects and 17 percent said it generated new clients.

"We see advisors are able to find new prospects and are able to translate that into client relationships. We expect that trend to continue into next year as the advisor presence continues to grow," she said.

The biggest obstacles to advisors using social media in a business context are a lack of best practices and a lack of understanding of the compliance issues, she said. It comes down to "making sure they understand what the firm policy is and why that's the policy. Oftentimes there is a disconnect between how advisors envision they can use it and how they are actually able to do that today," Campbell said.

So why get involved with social media now?

Relationships between financial services firms, advisors and clients are very important. "Social networks are built on a deep personal relationship between people. While an individual might not develop one with a company, they are looking to develop that relationship with an individual. Social media provides that opportunity," she said.

Many people utilize social media because they are looking for information that matters to them. Demand is a major issue. Clients are "choosing to communicate within social networks, creating demand for visibility of the type of information that is available from advisors through social networks," Campbell said.

Social media is providing a vehicle for business growth, she added.