A year ago, nearly 70 percent of asset managers sat on the sidelines of social media. Now nearly the same percentage are using it in some way, and most prefer Twitter, says a Cerrulli Associates report.

More asset managers are embracing the use of social media as part of their firm's marketing efforts this year, according to a new report published by Cerulli Associates in its July edition of its monthly newsletter The Cerulli Edge--U.S. Asset Management Edition.

Entitled "How Are Firms Steering Social Media to Optimize Opportunities and Migtigate Risk," the report, which focuses exclusively on social media, includes findings from a proprietary survey conducted on this topic in conjunction with the National Investment Company Service Association. The report examines ideas and best practices for firms to use social media for optimizing opportunities and mitigating risks.

"In 2010, Cerulli's research indicated that nearly 70% of asset managers were on the sidelines with respect to adoption a social media strategy," says Pamela Debolt, senior analyst for Cerulli Associates and contributor to this research report. However, a year later, Debolt says "nearly the same percent are now using some social media tools, or are fully embracing social media as an integral part of their marketing strategy."

The report indicates an estimated 63% of asset managers who last year were exploring how the company might use social media, are now using it themselves. An estimated 13% of managers now describe the use of social media as a key component of the company's marketing strategy.

Among those asset managers who are embracing social media, a majority (56%) are choosing Twitter, the report says, because of its ease of use compared to other social media, including Facebook or LinkedIn. 

Cerulli has divided asset management firms into four categories, based upon their position towards social media. Categories include: Committed adopters; Guarded adopters; Sidelined supporters; and Abstainers.

So far the percentage of committed adopters is small and mainly are large asset managers that employ direct-to-investor distribution, says Cerulli. The group is classified as early adopters who have embraced social media now as a key ingredient in their company's  marketing strategy. 

"Regardless of the position, there are activities firms can be employing to remain current with respect to social media. Even abstainers will be best served to adopt a proactive stance to social media for competitive reasons and to monitor their own brand," says Cindy Zarker, head of Cerulli's retail asset management practice.

Cerulli's report says that for those firms that fall into the first two categories, it's important to establish a social media strategy that includes a solid business plan, and to gain management commitment to allocate company resources to it.

To get a social media strategy started, Cerulli recommends a company establish a steering committee to guide social media planning; to identify a senior executive within the firm to lead and select key employees across the organization; and to review goals, new strategies and current activities to gauge whether they're meeting expectations on a regular basis.

Other social media guidelines priorities include: treating all social media content as advertising from a compliance perspective;  prioritizing search engine reputation management; and using social media tools for market research.

Despite the benefits, however, Cerulli's report advises that the risks--especially from a compliance standpoint--are considerable. A well-designed strategy, position and plan can assuage fears and assist tremendously from a competitive and branding perspective.

-Jim McConville