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.
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