A feature launched Tuesday by TD Ameritrade on its retail-facing website shows a new way investors can monitor social media "chatter" on selected stocks. The company is researching how it could bring the feature over to its advisor side.
The tool aggregates information from a publically traded company’s Twitter feed, as well as comments from other Twitter users referencing that ticker. The tool allows investors to gauge broad investor sentiment about the brand. For example, when looking up the Apple ticker (AAPL), users can now see how many people are talking about Apple on social media and what the general feeling is towards the company, alongside the traditional earnings reports and stock performance.
“Industry trends and our own research show us that engaged investors view Twitter as a destination of choice for getting a more comprehensive view of how a public company and its associated brands are faring,” Kevin Finn, TD’s managing director of eCommerce, said in a statement.
Many institutional traders and fund managers already have access to these research tools, but TD is unique in bringing it to their retail investors. If successful, it could pave the way for similar tools that advisors could use to interact with clients.
As with other cases of the financial industry expanding its use of social media, compliance is an issue. Finn said that his team worked closely with compliance and legal teams while developing the tool, and that they make sure clients know that social media posts are not enough to make financial decisions.
“We want our clients to use this as another part of their end-to-end research,” Finn said.
Before accessing the feature, investors have to acknowledge that none of the information reflects a recommendation by TD Ameritrade and that Twitter information is risky.
“Anyone can post to social media, and you often cannot establish the identity, knowledge level, investing expertise, or even the intent of the person posting,” says TD disclaimer on a YouTube video demonstrating the feature. “Posts are not subject to any fact-checking. Opinions presented may be completely without reasonable basis, and claims may be unsubstantiated.”
To help filter through the noise, TD worked with SwanPowers and it’s LikeFolio software to create a curated list of relevant Tweets about a given company. The company also analyzes the Twittersphere’s sentiment toward the brand, displays which companies are trending and which are the most Tweeted about.
But isn't there a risk of having the information filtered by a third-party company that pays Twitter to license the data stream?
“TD Ameritrade is trying to give our clients a bit of an edge and trying to give them objective information,” Finn said, adding that compliance issues or bias filtering really isn’t a concern for the company. “We are going to do due diligence with a company we partner with and we are going to monitor the content that comes through.”
“I think consumers are smart and over time they are going to filter our in their own way what is most relevant, what is most applicable to them, and what is most reliable… I think it’s another tool in the toolbox for our investors to make educated decisions.”