The way people communicate and do business is changing, and many advisors have looked to social media as a great opportunity to meet people and share influence. They’ve also seen it as a swamp full of traps and possibly a compliance nightmare. Many still wonder how best to use it.

But it is little surprise that most financial professionals believe social media could be a game-changer for their businesses—if they can find cost-effective ways of overcoming the challenges, such as their uncertainty about how to get started, how to access content, the time commitment and the lengthy approval times for compliance.

Unsurprisingly, social media use is highly correlated to the age of the advisors using it. Those under 30 use social media 50% more in their practice than their peers over 60 years of age. 

Financial advisors are largely not active on social media—and not committed to social media marketing—but the results of a new survey by Gainfully, a social media marketing firm, and our firm, WealthVest Marketing, make it clear—those advisors now starting their practices are using social media and will be the most successful advisors as their practices mature.

The Gainfully survey, which queried more than 1,100 investment professionals from all channels of distribution, including financial planners, RIAs, wirehouse brokers, bank advisors and independent insurance agents, found, most tellingly, that advisors generating more than $1 million in annual revenue use social media marketing over 40% more than low-producing advisors. Their commitment to social media has a high correlation to success in social media and advisor revenue.

Advisors committed to social media marketing are also the most successful. Among advisors who characterized their social media use as “extensive,” more than 70% reported an increase in assets under management or revenue due to social media marketing. Among the dabblers, only 40% reported increases due to that kind of marketing. 

The story was similar when advisors were asked about the effects of social media on their ability to attract clients. Overall, about two out of 10 financial professionals reported that social media had helped expand the number of clients they served by 10% or more during 2014. In contrast, almost six in 10 “extensive” users realized similar results.

About 4% of the respondents said they relied on a third-party platform to post content on various digital and social media platforms on their behalf, and two-thirds said they were or might be interested in engaging such a service. Since most respondents (82%) do not spend much on social media marketing, the cost of such a service may need to be low or free to attract users. 

Recognizing The Potential Of Social Media

The vast majority of financial professionals (90%) believe that social media is or could be valuable to their businesses. And they’re right. While relatively few currently take full advantage of social media platforms, those who do reported adding new clients, increasing assets under management and growing revenue streams, often within months (and sometimes weeks) of becoming actively engaged in social media. 

Some platforms are more helpful than others. LinkedIn is dominant. Google+ and Twitter barely register with financial advisors. But the respondents said they commonly engaged with prospects, clients and peers on LinkedIn and Facebook, through e-mail and on their professional websites. 

Top Advisors Are Top Social Media Users

Successful advisors (financial professionals who earned $1 million or more in gross commissions or fees during 2014) participated in social media more than any other income group. Thirty-eight percent characterized their social media use as moderate to extensive, and 21% said they were basic users, while the remainder reported using social media minimally or not at all.

When engaging clients through social media, 66% of high-income earners said their primary goals were to improve their professional brands, while 53% said they wanted to share relevant news and content with clients. Forty-seven percent said social media also helped them generate new prospects and leads, while 44% said it helped them network with professional peers. Forty-four percent also said it helps them access expert commentary and news, while 16% said it helps them reduce marketing expenses.

Almost one-third of million-dollar advisors saw results immediately after engaging clients and prospects via social media, and 56% realized benefits within the first 12 months. That’s a significantly better result than experienced by the group as a whole. Just 20% of all financial representatives who participated in the survey reported immediate results, although 58% realized positive outcomes within the first year. 

LinkedIn, e-mail and professional websites are the most valuable digital tools for top producers. All reported spending time on LinkedIn every week. Eighty percent logged into the site two or more times each week. Facebook was the second most frequented site (59% visited two or more times weekly), followed by Twitter (35%), Google+ (34%), YouTube (33%) and blogs (24%). 

The majority (70%) of high-income earners plan to increase their social media use in the future. Many indicated interest in finding a third-party platform that could manage social media communications on their behalf. Seven percent of top producers have already done so (as compared with just 4% of all financial representatives).

 

Level Of Social Media Use Is Important 

It seems clear that making a commitment to social media has significant benefits for financial professionals. The greater the commitment, the more robust the results. Of those financial professionals using social media, 5% characterized their level of use as extensive, 19% as moderate, 26% as basic, 28% as minimal and 22% said they didn’t use it at all.

Relatively few indicated they used social media “extensively” or “moderately”; however, those who did attracted new clients, increased revenue streams or gained additional assets, often during the first year of engagement. Seventy-six percent of representatives who were most committed to social media (and tracked its impact on AUM) saw assets grow during 2014. 

Financial professionals who made greater commitments to social media also appeared to realize a higher return on investment with new clients. Almost one-half (45%) of moderate users and more than one-half (58%) of extensive users expanded their client bases by 10% or more during 2014 because of social media marketing efforts. One in 10 of those financial professionals who used social media extensively saw an increase of 50% or more.

Content Is Critical

Persuasive and educational compliance-approved content is critical to active participation on social media platforms. But it has proved to be a significant challenge for many financial representatives, who indicated in the survey they have little time to create content, and that compliance approval takes too long. 

Without quality content, it’s difficult to generate interest or motivate prospects and clients to interact through social media. Financial representatives indicated they would like to have access to and opportunities to share diverse types of content. These include:

73%  Client communications
(non-product related)

52%  Market insights/commentary

40%  Practice development insights and advice

37%  Financial news

36%  Informational webinars

36%  Product content

As you can see in the table, far more representatives had access to quality content if they were active participants on social media. This represents an opportunity for broker-dealers and other financial companies that provide content. If more producers had access to relevant, compliance-approved content, they might engage more actively through social media, growing their practices and improving their profitability.

About 4% of respondents rely on a third-party platform to post content on various digital and social media on their behalf, and two-thirds are or might be interested in engaging such a service. However, since most respondents (82%) currently do not spend money on social media marketing, the cost of such a service may need to be low or free to attract users. 

Removing Stumbling Blocks

It is easy to understand why the majority of financial professionals believe social media could be a game-changer for their businesses. The next step for many is developing strategies for engaging effectively through social media. 

The rewards are rich, as the survey results suggest that the more active a representative is on social media, the greater the benefits his or her practice realizes when it comes to attracting new clients, increasing AUM and improving revenue streams. 
 

Financial Services Professionals Are Late To The Social Media Game

It’s little wonder that many financial services professionals don’t know where to begin when it comes to social media. Some may not be proficient; even those who are may be worried about compliance issues. 

Social media platforms have been around for more than a decade. LinkedIn was founded in 2002, Facebook in 2004, YouTube in 2005 and Twitter in 2006. Yet the first social media guidance provided by the Financial Industry Regulatory Authority (Finra) wasn’t published until 2010. 

Without new rules to govern social media use, financial services firms were on their own when it came to identifying the potential risks associated with social media use, introducing governance policies to mitigate those risks, and implementing technology solutions to make oversight possible and facilitate regulatory audits and e-discovery events. 

It was a tall order. In 2012, the Securities and Exchange Commission (SEC) published a “Risk Alert” about social media that observed, “Many firms have multiple overlapping procedures that apply to advertisements, client communications or electronic communications generally, which may or may not specifically include social media use. Such lack of specificity may cause confusion as to what procedures or standards apply to social media use.” 

Almost seven in 10 financial representatives who participated in the “2015 WealthVest Marketing/Gainfully Survey” indicated their firms had formal social media policies or guidelines in place, and an equal proportion reported that these policies allowed productive use of social media. 

While some of the issues that prevented financial professionals from interacting with prospects and clients through social media have been resolved, many representatives remain uncertain about how to begin to integrate social media into their practices. The learning curve may prove steep, but better tools and resources are available today.

Wade Dokken is the founder of WealthVest Marketing and the former president of American Skandia.

Click here to read the "Rethinking Retirement - Social Media Marketing for Financial Professionals" Whitepaper.