The bottom line from financial advisors is that social media, so far, does not necessarily produce the much-hyped benefits of better brand awareness, competitive differentiation and revenue growth in their practices, according to a new Aite Group study.
One-fifth of advisors surveyed said social media was unimportant to their practice. Another 40% said they were neutral about its importance. Aite Group surveyed 437 advisors in the first quarter for the study, and compared the results to a prior survey conducted in 2009.
“The absence of benefits provided by social media may be muting advisors’ views of the potential impact of social media on business objectives,” Ron Shevlin, a senior analyst at Aite Group, and a co-author on the report, said in a statement.
Aite Group cited several issues for advisor wariness. For one, they don’t always know which site to use for what purpose. Between 2009 and 2011, the percentage of advisors who said they use social media professionally grew by almost on third, according to Aite Group.
Of all the social media sites that Aite Group followed in its study, only the use of LinkedIn grew between 2009 and 2011. The Boston-based research firm added that LinkedIn might have more value as a client-prospecting tool than other sites, which fewer advisors realized in 2009. Meanwhile, other sites are better at building a firm’s brand awareness and differentiating themselves from the competition.
A narrow focus on compliance is also muting the tools’ effectiveness, says Aite. Wealth management firms are often so preoccupied with meeting FINRA guidelines that they do not measure the effectiveness of the messages. When they approve tweets and status updates, firms often draw a blank on basics like: ‘Why are we posting this message? When should we post this message on a particular site or tool?’ and ‘How effective were previous messages, in terms of impact?’
Not all of the findings were discouraging. One social media benefit consistently garnered more mentions in 2011 than in 2009: Communicating and interacting with existing clients, according to Aite.
“It’s hard to criticize advisors for aggressively going after new clients,” Shevlin said. “But many seem unwilling to admit that social media may be better suited to communicating with existing clients than to finding and acquiring new ones.”
Donna Mitchell writes for Financial Planning.