Brokerage firms continue to talk a good game when it comes to social media, but few are actually doing anything about it, and that may turn out to be a mistake.

According to a report by Corporate Insight, almost all full-service brokerage firms expect the quality and content of social media outreach to improve, but James McGovern, the firm’s vice president of consulting services in New York, says few are willing to make the first move.

“There’s a lot of intent,” he says, citing 2008 data. “But there hasn’t been much by way of an embrace.”

Ironically, mutual funds, which were by far the most conservative of the financial services firms when it came to social media two years ago, have picked up the ball and run with it. Vanguard, for instance, has a corporate blog through which is offers commentary on various subjects and it has its own Facebook page.

In general, “asset management firms are at least leveraging their intellectual capital,” McGovern says.

Full service firms, by comparison, remain hobbled by vague rules from FINRA and onerous requirements where the rules are clear. “Archiving Facebook communications for six years is a pain, plus the rules are not yet crystal-clear to the attorneys charged with protecting these firms,” he says.

Advisors are taking baby steps. McGovern says that anecdotally, around 100,000 financial advisors have page on LinkedIn. “They’re creating profiles and connecting with their existing clients,” he says. At the very least, the site allows advisors an easy opportunity to keep up to date with what’s going on in their clients’ lives.

McGovern doubts that compliant sites such as Linked FA, while they keep advisors the right side of the law, are likely to catch on. “It sounds like the technology is great, but how are you going to get clients to sign up?” he points out. “It’s a lot easier to swap emails or to pick up the phone every six months.”

Full service firms’ reticence is a problem because both advisors and their clients are now used to using social media: “You need to be where the action is,” McGovern says.

Mitchell Kauffman, an independent advisor with Raymond James in Pasadena, Calif., is comfortably walking what the full service firms still see as a tightrope, using LinkedIn and, soon, Twitter and Facebook to disseminate pre-approved white papers he’s written on the market. Kauffman is also setting up a YouTube account to post videos of him discussing economic conditions. It’s all compliant, and the advisor hopes the content will lead to clients and prospects to sign up for more. “In an economic downturn, people are looking for more meaningful connections,” he says. “Regulators’ narrow approach is missing an opportunity to serve investors.”

Kauffman says that while he has received a few inquiries from prospective clients who found him through his social media outreach, that aspect of the strategy is still in its infancy. “Networking is not about hunting, it’s about farming,” he says. “I’m making myself available as a resource and feedback is positive, but I can’t say it’s opened the floodgates of new business, although that may come at some point.”

Rather, “this is something that can really help build close relationships, reassure clients and help enhance my search presence,” on the internet.

Most advisors, though, are still on the sidelines, and that’s a problem. While full-service firms are dragging their feet, other firms are leaping in. Charles Schwab, for instance, uses Twitter for customer service and it has created customer communities. And self-service firms Zecco and TradeKing have both made social media the focus of their business, with investment forums that are open to anyone who wants to join, the goal being “to drive traffic and turn investors into customers,” McGovern says.

Even banks are trying it. Wells Fargo stands out for launching a blog the day after its acquisition of Wachovia to update customers on its integration. It was also one of the first banks to use Twitter, reaching out to users—those with a significant number of followers at least—who were complaining about fees of service.

McGovern doesn’t expect full-service firms to hold out much longer—the competition is simply too great. “Once these firms work out the data monitoring and retention issues, and their advisors understand what they can and can’t talk about, we’ll see some interesting developments,” he says. “It’s inevitable; it’s the way the world is going.”