More financial advisors are beginning to embrace the marketing and informational capabilities of social media, but according to this year’s eighth annual Survey of Advisors’ Social Media Use by American Century Investments (ACI), many advisors would just as soon not.
During January 2019, ACI, in partnership with research firm Dynata and consulting firm Assist You Today, surveyed 301 financial advisors, many with less than five years of experience.
About a quarter of advisors (28%) came from wirehouses; almost half (40%) from independent broker-dealers (IBDs); and a third (32%) from registered Investment advisors (RIAs).
ACI said it conducted the survey to investigate advisors’ use of social media for business purposes, as well as their personal feelings about it for that purpose.
ACI found that while most advisors were using social media, only 40% were using it for business purposes on a daily or weekly basis.
ACI determined that one of the main reasons for low overall business usage was that nearly a third of participants were with RIAs, and that RIA advisors were using social media at a considerably lower rate than financial advisors from wirehouses or IBDs, skewing the results of the survey.
Only 21% of RIA advisors said they used social media for business purposes, compared with 62% who said they did not. Almost half of RIA advisors surveyed said they didn’t try to find their target audience, let alone a prospect, by using social media, and over half said they did not send invitations to connect on LinkedIn.
In comparison, 62% of other advisors said they have scheduled a meeting in the past year as a result of social media, while only a third (35%) of RIA advisors said they did. In fact, almost one in five wire house or IBD advisors have scheduled more than 10 meetings in the past year from social media, while only one in 20 RIA advisors have. As a result, most wire house and IBD advisors have gained AUM in the past year from their social media activity, compared with only about one in three RIA advisors.
Despite those gains, neither group is seeing large increases (only six percent of wire house and IBD advisors and two percent of RIA advisors) in their client assets under management (AUM) by more than $10 million in the past year as a direct use of social media.
ACI found that advisors with five to 20 years of experience are using social media more effectively than advisors with considerably less experience and far less AUM, who said they are not seeing the same benefits from its use.