Despite the hype about the benefits social media can bring to financial advisors, most advisors don't find it very useful in their businesses.
According to a survey of advisors from independents to wirehouses, only a minority are seeing positive results and many feel social media takes more time then it is worth. Social media, particularly LinkedIn, can help advisors communicate with existing clients, but few see it as very useful in attracting new clients, advisors say.
The revelations are part of a comparison of attitudes of 437 advisors between the third quarter of 2009 and the first quarter of this year done by Aite Group, a research and advisory firm for the financial services industry. The survey included advisors from broker-dealer firms, wirehouses and independents.
The percent of advisors using social media has increased from 35% to 47% over the time period compared, but only LinkedIn has gained in use while other sites or methods, including blogging, have decreased.
Although reaching new prospects was the most mentioned benefit from using social media sites, still only 19% say they were successful in gaining new clients this way, compared with 36% who found some success in 2009.
When asked if they had increased revenues from the use of social media sites, the results were even less encouraging with only 6% reporting an increase, down from 16% in 2009.
"Since 2009, the percentage of advisors who believe that social media supports various business objectives to a 'great extent' has declined (and) the absence of benefits from social media may be muting advisors' views of the potential impact of social media on business objectives," the surveyors say.
Few advisors who do not already use social media say they plan to in the future. Only 6% say they are very likely to start using Facebook or LinkedIn. At the same time, only 34% say they feel social media will be important in the future (an increase from 23% in 2009) but only 7% say it will be very important (compared to 8% previously).
Compliance issues seem to be one factor holding back the use of social media. Almost three-fourths of advisors say their firms have a written policy about using social media and, of those, 82% say the policy prohibits or limits its use.
A higher percentage of independent advisors use social media than other types of advisors and yet independent advisors were the largest group to say social media does not support business objectives "at all," the survey says.
Vendors of social media technology have a number of recommendations about how advisors can take better advantage of the new communications methods, including using original content rather than prepackaged information. They also recommended advisors make an active effort to decide who they are trying to reach and what they are trying to say.