Reasons Financial Advisors Should Use Facebook

Financial Advisors Using FacebookSocial media sites like Facebook, LinkedIn, and Twitter are changing the way people access information and communicate. Facebook is said to be the largest social media vehicle in the world. [1]As of Oct. 2013, 500 million people were using Facebook and more than 250 million accessed the social media site from their mobile device.  This adds up to a lot of potential clients.

If you aren’t part of the growing group of financial advisors who are embracing social media to develop closer relationships with clients and gain exposure to potential clients-particularly younger investors- you need to reconsider.

High-net-worth investors are increasingly connecting with their money managers on social media. Some 5 million affluent investors use social media to research financial decisions, according to a report by Cogent Research, in partnership with LinkedIn. Of those, 73 percent use LinkedIn, 53 percent use topic-specific discussion boards, and 26 percent use some combination of Facebook, Google+ and Twitter.

Social media users aren’t just young people, although a firm should assume Millennials, both financial advisor recruits and investors, are digital natives. Skill and comfort levels vary across ages and individuals, but for many clients in their 60s and 70s, social media is the way they communicate with children and grandchildren living around the world. They, too, have high expectations of social media service quality from their investment advisors.

Approximately 35 percent of financial advisors acquire new clients through Facebook. That’s significant. According to a study from Sysomos, a social media software provider, and Marketwired, a business news data channel, between 60 and 70 percent of all investors surveyed say they use “traditional” sources of information (like newspapers and Wall Street analyst reports), but 40 percent say they use social media as a key investment information source. Given the relatively short lifespan of platforms like Facebook and Twitter, it’s an eye-opening number, Sysomos says.

According to Jim Delaney of Marketwired, nearly 40 percent of respondents use information from social media when making investment decisions, and the number jumps to 60 percent when looking at the next generation of decision-makers.

In a 2013 study of 400 U.S. financial advisors by Accenture , a technology services and outsourcing company, 48 percent report using social media to interact with investors on a daily basis; 74 percent of U.S. investment advisors say social media is a useful tool in increasing assets under management, while 50 percent say they have “successfully used social media to convert prospects into clients.” Further, 9 percent of investors surveyed by Accenture claim firms which fail to leverage social media will lose clients to firms using social media to engage clients. The study also reported about 60 percent of advisors surveyed, who were active on social media, had client portfolios over $20 million.

Alex Pigliucci, global managing director of Accenture, said “social media creates a huge opportunity for firms getting it right and a real risk for firms which regard it as a threat. Firms will have to recruit and train advisors on the basis of their ability with social media if they are going to survive the generational change, when Millennials will become increasingly important as both advisors and investors.”

The goal of social media is engagement. How can financial advisors start using Facebook and other social media platforms to attract new clients and solidify relationships with existing clients? Investopedia offers some tips which 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 these channels aren’t suitable for the delivery of financial products and services. A word to the wise, as a financial advisor, check with your independent broker-dealer regarding their social media policies. Social media, however, 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.

Generate and Share Relevant Content: Facebook is a casual visual network and its language is photos and videos. According to Michael Idinopulos, chief marketing officer at PeopleLinx, a social media services company, investment customers and prospects are hungry for advice and tips which 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 – which 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 in the morning or in the evening as they check email and Facebook and LinkedIn after dinner.”

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