Making Social Media for Business Accountable, Actionable and Effective

State of Financial Social Literacy in the Financial Services Industry!

Penton Media’s Registered Rep and WealthManagement.com conducted an online survey in September, 2011 and February, 2012 for financial advisors.  The survey sought primarily to determine the social media presence among advisors from all channels, as well as examine the business purposes for which social media is used.

The report A Day in the Life of a Financial Advisor: Current and Future Social Media Trends surveyed approximately 1600 respondents in September 2011 and more than 1400 respondents in February 2012 and highlighted a few meaningful trends and change in the industry.

Advisor Demographics

Advisors had on an average 220 clients, and an average $86.4 million in assets under management.  A majority (29%) were affiliated with a wirehouse or national firm, or worked for an independent broker dealer (24%) and served primarily as a financial planner (34%), wealth manager (17%) or investment manager (14%).

How Advisors Spend Time

Advisors spend over 50% of their time on client management and prospecting.  For the next 12 months, however, many advisors expect client acquisition through prospecting to be the leading driver of business growth.

To help them keep up, many advisors have turned to social media.  The survey found that a majority of respondents indicate using social media for one or more business purposes, with networking and client prospecting being the most popular.  Between 2011 and 2012 social networking activities increased by more than 10%, whereas those using social media to keep updated on industry news decreased by five percent during the same time.

Still, approximately 43 percent of advisors do not use social media for business purposes.  Though, 74% of respondents who do not currently use social media for business purposes are interested in learning more about how to use social media for prospecting, marketing and client communication.  This clearly shows that financial advisors want to learn how to incorporate compliant social media into their practice.

Social Media Trends

The survey showed that over one in four advisors have landed clients from social media efforts. In most cases, the social media connection followed a more traditional first contact. However, clients acquired from social media prospecting had a smaller average portfolio.  Nearly 10% of advisors indicate the average portfolio size of clients acquired through social media is larger than $500,000.  Once Investment representatives learn how to properly use social media for business growth, that number will go up.

What platform are advisors using the most?

LinkedIn activity dominated (84%) social media usage among advisors, followed by Facebook (28%) and Twitter (16%).  There is a goldmine of opportunity on these underutilized social networks.

What types of content are they sharing? Receiving?

Interestingly, many advisors stated that they are unlikely to send content or communications to clients using social media. Those who do are likely to create their own content or use content created by their firm.

Currently, only 13% of advisors receive information from product providers via social media, though half indicate they would be interested in receiving it.

Social Media Challenges and Concerns

The survey showed that for many advisors social media policies help guide their activity and presence on social media.  Advisors from Wirehouses and bank brokerages are most likely to have a written social media policy, while RIAs are least likely to have a policy in place.

For those with policies in place, nearly two-thirds of firms prohibit the use of Facebook, YouTube and Twitter for business purposes.  More than one in four prohibits the use of LinkedIn.  For a financial professional to succeed in the future, this needs to change.

Compliance is considered to be the primary challenge when using social media, with advisors showing concerns about compliance and regulatory aspects of using social media.  Advisors are most uncertain about how to answer questions, if they can share opinions or advice with clients.

There’s good reason why compliance should be a concern as most respondents indicated that they do not actively archive their social media interactions. Fewer than one in ten advisors personally archive social media interactions, while an additional 17% indicate this is a function of their firm.  22% of respondents are unsure if their interactions are archived, while 33% of respondents from wirehouses are unsure if their interactions are archived.  Clearly, there is a high percentage of registered investment advisors are on social media, where is the social media education?

Where to go from here?

Advisors already on social media should be pro-active and reacquaint themselves with FINRA policies and those of their companies concerning social media activity.  They can also develop effective strategies for using social media to actively listen and monitor prospects, and clients, looking for the reasons that are going to influence their buying decisions.

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Similar study from American Century Investments

Enjoy Pat Allen of Rocktheboatmarketing’s perspective of American Century’s report: Really? LinkedIn Groups Are Asset Managers’ Most Important Social Media Offering?