Advisers Who Use Social Media Gain More Revenue
While it may be unclear if the two are connected, some financial advisers that use social media professionally are seeing higher revenue growth and larger client bases compared to advisers that do not use the network channels.
According to the "Financial Advisors' Use of Social Media" report from Aite Group, which collected responses from 402 financial advisers, 36% said social media has helped them reach new prospects. More than one in five credit social media for increased awareness of their practice, wider increases in their books of business and differentiation from their competition.
Still, more advisers use social media on a personal level, Aite found. Sixty-three percent said they use at least one social media tool on a personal basis while 35% use social media professionally.
"Despite firms' philosophies, advisers that use social media professionally are believers in its benefits," said Ron Shevlin, senior analyst with Aite and author of the report. "Beyond the benefits that they have already realized, advisers using social media feel that the tools can help support a range of business objectives, from building customer relationships to supporting customer acquisition and employee recruitment efforts."
Shevlin acknowledged that the picture gets murky with advisers tying the bottom line to social media.
"They're sales people, not marketers," he said. "Attributing bottom line sales to social media is something they really have a hard time doing. One thing we did find is a little more than a third are using some type of social media tool or site for professional reasons. On average, they demonstrated higher growth but in no way do I want to imply that social media was responsible for that growth."
For professional use, LinkedIn is the most popular site followed by Facebook, according to the Aite report. Registered investment advisers were more likely than other types of advisers to use social media with one in four using Twitter and one in five maintaining a blog.
Still, financial service firms are still in the early stages of building their competency in social media. Six in 10 described their knowledge as novice or beginner. Aite found that firms' attitudes and policies toward social media trend toward suppressing its use among advisers. More than half of advisers work for a firm that has a written policy governing the use of social media tools. Among those firms, 84% prohibit or limit the use of the channels.
"From a credit union or small firm perspective, [Financial Industry Regulatory Authority] views can be interpreted as being supportive of social media. I actually think they're very neutral," Shevlin said.
Indeed, compliance and regulatory concerns topped the list of reasons why firms prohibit or limit the use of social media. Aite said without changes to their policies, further adoption may be limited in the future. Among advisers who are not using social media on a professional basis, 10% said they are likely or very likely to use LinkedIn in the next year. Shevlin said this lack of adoption could have negative consequences.
"It may result in attrition where advisers will go to other firms that have policies that will bolster the use of tools to grow their business," Shevlin said. "What I say to those firms with regulatory concerns is this isn't about e-mail, or writing a blog post every day. FINRA is very clear. Firms are not accountable for what a customer or third party provides on a site."
For Shevlin, the bottom line is no one knows for sure how or if social media impacts adviser performance.
"I will argue that until I'm blue in the face. It's still too new. No one knows if Facebook or blogging really works. But the more successful advisers are the ones that are willing to try different channels. They're saying 'let's get on Facebook or Twitter and see if it works.'"