When it comes to acquiring and retaining clients, social media channels are on their way to becoming as important as traditional media channels for wealth managers, according to a study from Celent.

"The use of social media among wealth managers provides an opportunity to increase client communication, add touch points, and increase client stickiness,” study coauthor Isabella Fonseca said in a statement.

Fonseca is director of research at Boston-based Celent, an international research and consulting firm, which sponsored the research. "However, wealth managers who have not taken the initial steps in developing a social media strategy run the risk of losing their relevance in a world where even the most thoroughly vetted and sophisticated advice can drown in a sea of peer-generated content."

Some of the report’s key findings include the following:

-- Assessing social media ROI remains in question. However, qualitative assessments, including information on numbers of views and followers, are available today. More sophisticated analytics – known as “social analytics” – will become available in coming years.

-- Marketing departments in large RIAs drive the purchase of social media technologies. But the compliance departments must ensure regulatory compliance. As a result, effective social media policy will require an increasingly close partnership between both departments.

-- Most wealth management firms today have some social media policy in place. More conservative firms distribute pre-approved information while smaller ones build their brands by allowing employees to voice their opinions over social media channels. Given the risks of the latter, this model might not work well for larger wealth management firms.

-- Regulatory clarity is the most important factor in promoting increased use of social media. Today, wealth managers don’t have a clear picture of precisely how to remain in regulatory compliance when it comes to social media. For now, firms are largely on their own in determining which standards they will establish.

-- Because younger generations use technology and social media more, wealth managers will be compelled to reach these prospective customers through mobile social networks.

-- The economic downturn in 2008 adversely affected investors’ opinions about wealth managers. Regaining their trust will require reaching and communicating with them through more dynamic channels, including social media.

Given high levels of uncertainty in this rapidly evolving space, the study concludes that making the right social media choices has become paramount for wealth managers.

Ann Marsh writes for Financial Planning.


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