How Financial Advisors Are Leveraging Social Media

Written by Brian O'Connell at Investopedia 

Today's investment advisors are well aware of social media giants like Facebook, Twitter and LinkedIn, yet about 50% don't know which levers to pull and which buttons to push to make social media a key tool in their firm's marketing campaigns. That's a mistake, as investors, especially younger ones, are pulling ahead of financial advisors on the use of social media in managing their money.

How Financial Advisors Are Using Social Media

According to a brand new study from Sysomos, a social media software provider, and Marketwired, a business news data channel, up to 60 to 70% of all investors surveyed say they use "traditional" sources of information (like newspapers and Wall Street analyst reports); but 40% say they use social media as a key investment information source. Given the relatively short lifespan of platforms like Facebook and Twitter, that's an eye-opening number, Sysomos says.

"Nearly 40% of respondents use information from social media when making investment decisions, and the number jumps to 60% when looking at the next generation of decision-makers," explains Jim Delaney, of Marketwired. "This is why we believe companies should take an integrated approach to investor relations, combining traditional and social communication, so they are able to reach their stakeholders and influencers wherever they are most active."

In another recent study of 400 U.S. financial advisors, 48% of advisors report using social media to interact with investors on a daily basis; 74% of U.S. investment advisors say social media is a useful tool in hiking assets under management, while 50% say they have "successfully used social media to convert prospects into clients." Further, 9% of investors surveyed by Accenture claim firms that fail to leverage social media will lose clients to firms that use social media to engage clients.

"The use of social media to interact with clients is a differentiator for advisors today, but it will be mere table stakes in the not-too-distant future," says Alex Pigliucci, a global managing director at Accenture. "Wealth management firms that fail to adopt social media will miss an opportunity to build relationships with clients on their terms. This is becoming increasingly critical as investors are demanding online resources to help them better understand investment strategy and advice."

How can wealth managers better leverage social media to attract new clients and solidify relationships with existing clients? Here are five good tips that experts say every financial advisor should have in his or her social media marketing arsenal.

Spread It Around

For starters, financial advisors should not be looking to use social media strictly to sell products and services. There are significant regulatory considerations, and in addition, these channels aren't suitable for the delivery of financial products and services. However, social media can be very powerful in other ways for advisors.

Social media is a fantastic content distribution platform, giving advisors the ability to showcase intellectual capital and thought leadership. Social media can also be used to promote personal and corporate brands, and help "humanize" the brand. The trick is to make Facebook, Twitter and other social media outreach programs work for you - instead of the other way around.

Generate and Share Relevant Content 

According to Michael Idinopulos, chief marketing officer at PeopleLinx, a social media services company , investment customers and prospects are hungry for advice and tips that will help them take their next steps on the road to solid financial planning. "So generate content – videos, blog entries, short white papers, case studies – that helps them solve a problem or increases their awareness on a hot topic in the industry," he advises. "Share this content as a status update and experiment with timing − you'll reach a lot of contacts first thing in the morning or in the evening as they check email and LinkedIn after dinner."

Join LinkedIn Groups

Joining relevant discussion groups is a great way to connect with customers and prospects to increase your brand awareness," Idinopulos adds. "Once you are a member of a discussion group, you have the ability to send personal messages to members of that group," he says. "However, as a best practice, consider this functionality to be a privilege to be used judiciously so you don't risk being labeled as a spammer."

Use Faceted and Saved Searches 

The "Faceted Search" function on LinkedIn allows financial advisors to target your searches for prospects based on seven different facets: current company, past company, location, relationship, industry, school and profile language. Once you've created a faceted search that you find valuable, you can save that search and receive notifications when that search result is updated.

Use Social Media to Support Your Investment Advice

Accenture's Pigliucci, says that advisors can use sites like Facebook, Twitter and LinkedIn to build trust and rapport with customers. "If an advisor makes a recommendation but doesn't take time to explain it, that will erode trust," he explains. "A better way would be to make a recommendation is to push some information about the recommendation and links to outside sources to the client's computer or tablet, and give them time to think about it."

The Bottom Line

Financial advisory clients are increasingly turning to social media to streamline, and even help manage, their investment portfolios. As the Sysomos and Accenture studies attest, wealth managers who aren't working with social media risk being left behind – perhaps permanently.