Why Financial Advisors need to use Social Media

Today’s financial advisor is well aware of social media platforms like Twitter, Instagram, LinkedIn and Facebook, yet many do not know how to leverage each social site or how to integrate into their firm’s marketing campaigns. In fact, our research indicates a common misunderstanding that many advisors share – that social media isn’t a tool that can actually drive qualified leads and that it is primarily for youthful teens or adults to share pictures of their food and favorite rock band.

Although there is some truth to this perception, the reality is that one of the fasting growing demographics on many of these social networks are adults age 35-65. Additionally, younger investors and those in line to succeed their aging parents use social media regularly to get their news, current events and advice on a multitude of topics – including social media. Nearly every major Robo Advisor places advertisements on Facebook and LinkedIn, and savvy advisors promote their blog post in the social streams of their ideal client 24/7/365.

How Financial Advisors Are Using Social Media
socialmediaAccording to a 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 (Source: Wall Street Journal).

“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.” (Source: Marketwired)

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. (Source: Accenture)

“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.” (Source: Accenture)

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.

1. Forget Selling, Build an Audience
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.

2. Generate and Share Relevant Content 
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. Advisors that generate content – videos, blog entries, short white papers, case studies – that help prospects solve a problem or increase their awareness on a hot topic in the industry, net higher engagement and social sharing.

3. Join LinkedIn Groups
Joining relevant discussion groups is a great way to connect with customers and prospects to increase your brand awareness. Once you are a member of a discussion group, you have the ability to send personal messages to members of that group.

4. Leverage Faceted & 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.

5. Focus on Generating Trust
Facebook, Twitter and LinkedIn are optimal platforms to build trust and rapport with prospective investors, however posting random articles or recommending products/services without providing context can erode trust. Rather than aimlessly pushing out messages for the sake of creating activity, consider how your recommendations correlate to your brand and provide context to your audience for each post, so that they understand what they should consider or why it’s important to take action.

The Bottom Line
Investors of all stripes are increasingly turning to social media to streamline and even 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.

Tags: financial services social media, financial advisor marketing, financial advisor social media compliance, financial advisors using social media, social media strategy for financial advisors

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