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 both independents and wirehouses, only a minority are seeing positive results and many feel social media takes more time than it's worth. Social media, particularly LinkedIn, can help advisors communicate with existing clients, but few advisors see it as very useful in attracting new clients, they say.
The Aite Group, a consulting firm, polled 437 advisors between the third quarter of 2009 and the first quarter of this year.
Aite found that the percentage of advisors using social media increased from 35% to 47% over this period, 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 of using social media, only 19% of advisors said they were successful in gaining new clients this way versus 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. Only 6% reported 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 survey says.
Few advisors who do not already use social media say they plan to do so in the future-only 6% say they're 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).
Compliance issues are a 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 among those, 82% say the policy prohibits or limits its use.
A higher percentage of independent advisors use social media than other types of advisors, yet independent advisors were the largest group to say social media doesn't 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 the use of 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.