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And according to a new study from Putnam Investments, over 80% of the advisors they surveyed were using social media for their business, reflecting how firms are finally figuring out the regulatory boundaries for communicating online.
The asset manager's study, done in collaboration with research firm Brightwork Partners, breaks down how advisors have taken to social media.
Advisors used LinkedIn for referrals and to connect with other financial professionals; Facebook to build their brand and enhance client relationships; and Twitter to build their thought leadership platforms and expand their professional knowledge. Additionally, the study notes advisors are using social media increasingly to gather their business news and information.
Although Putnam’s numbers come from a survey of around 817 advisors, these numbers appear to have some merit. In 2012, Emily Friedman and Neil Benedict conducted a LinkedIn survey that found that seven in 10 advisors used social networks for their business.
Furthermore, a study done earlier in the year by Cogent Reports surveyed over 200,000 advisors and found that 77% of them used social media in their daily work.
Mark McKenna, head of global marketing for Putnam, says that advisors’ usage of social media included platforms like Pinterest, where they would showcase lifestyle-oriented content to their clients and potential clients. “Advisors used Pinterest to share experiences and tips like what wines to use at a dinner, or cycling routes they preferred,” he says.
'USEFUL TOOL'
A more business-specific trend among advisors found by research firm Celent comes in the form of social trading, a hybridization of social networking and online brokerage sites.
“Social trading enables its global users to share local market information with each other in real time, thus democratizing information. It provides an individual with relatively inexpensive, expert-led investment guidance, while allowing him or her to maintain control over investment decisions. This concept of crowdfunding knowledge via social trading is presently targeted to those who are exclusively self-directed.”
Even so, Celent considers an active social media presence to be a useful tool, “However, advisors and traditional wealth managers would be wise to improve their personal (and not simply corporate) presence on social media platforms.”
Some firms have warmed up enough to the idea of social media that they have
Dominick Manaro, president of Executive Buying, a newsletter that follows insider moves for investors, writes in an email: “I was a financial advisor for 12 years. In that time I never had a social media account, mainly because most of my compliance officers wouldn't even want us to even have personal social media accounts just because of the risk of running afoul of the regulations. Now it seems like using social media is becoming more popular even with compliance officers.”
While firms continue to figure out their social media approach, McKenna thinks the use of social media among advisors has come a very long way and the early skeptics have come around.
“Advisors say that they talk with clients less but because they’re posting more content, they feel more connected to them as opposed to quarterly financial call,” he says.
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