Study after study has documented how financial advisors are using social media these days, and webinar after webinar purports to show them how to use social media tools to reel in new assets. Really financial advisors are just getting started, and already, the bloom seems to be coming off the rose, Aite Group says. According to an Aite Group survey of 437 FAs in the U.S. conducted during the first quarter of 2011, advisors are actually seeing limited or diminished benefits in using social media for professional purposes.
When asked about the benefits realized from their use of social media, 19 percent mentioned reaching new prospects, down from 36 percent in 2009. Eighteen percent said they’ve benefited by generating awareness for their practice, down from 23 percent in 2009. Other benefits were also diminished from 2009, including differentiating their practice from competitors, down to 9 percent from 21 percent in 2009; and increasing their revenue or fees, down to 6 percent from 16 percent in 2009.
But more advisors are using social media for professional purposes in 2011, at 47 percent, compared to 35 percent in 2009. Registered Rep.’s own research found that about 51.5 percent of advisors are using social media for business.
Ron Shevlin, senior analyst at the Aite Group, believes it’s very possible that the advisors who began using social media between 2009 and 2011 are laggards. These FAs might not be as comfortable using technology to begin with, or not as comfortable marketing themselves. The early adopters, however, were likely those who were good at marketing themselves and were able to use social media sites more effectively. The lack of perceived or realized benefits in the recent survey was most likely due to advisors’ ineffective use, poor planning, and lack of understanding of the tools, Shevlin said.
“Without understanding the strengths and weaknesses of the various social media tools, without commitment to using them, without creating valuable content for the various channels, sure, you’re not going to see results from it,” Shevlin said.
In Aite Group’s 2009 survey on social media use, on average, the advisors who were using social media for business purposes expanded their customer base and AUM at a faster or higher rate than the advisors who did not use social media. In 2011, that gap did not exist, Shevlin said.
“There’s no way I would attribute the higher growth in customer acquisition and asset acquisition to the use of social media,” Shevlin said. “What I attribute it to is the fact that, successful advisors, those who are good at marketing, are ones that figured out how to use social media tools and sites to enhance their marketing capabilities.
“Advisors, where marketing is not their strength, maybe are just turning to the tools and channels and thinking, ‘Well, this is going to help me become a better marketer,’ but I don’t think it works that way.”
If advisors are going to use social media effectively, they have to learn how to create content, and how to insert themselves into conversation, Shevlin said.
“Social media is not going to make an advisor a better marketer; they have to actually become better marketers first,” Shevlin added.
Given that reps aren’t realizing the benefits of social media, it would make sense that they wouldn’t be sold on its importance. When asked how important social media tools will be for advisors in the next three years, 40 percent of respondents were neutral. In addition, 19 percent said it wasn’t important, although this number dropped from 29 percent in the 2009 survey.
“The absence of tangible benefits from social media is muting advisors’ perception of its potential importance,” the Aite report said.
The report also pointed out that while compliance is important, wealth management firms and technology providers in the space may be too focused on compliance, rather than whether the messages they put out are effective. In April, we wrote that despite the hype, social media remains a regulatory minefield, at least for now. But creating canned content for advisors to Tweet or post is not going to cut it, Shevlin said.
“Advisors really need to be creating their own content; it has to be authentic,” Shevlin added. “It has to truly be their own voice and their own contribution. I think people see through the canned stuff pretty easily, and just don’t pay attention to it.”
Another reason advisors may not be seeing the benefits of social media is that the medium itself might not be that effective, or perhaps the demographics of the people on social media sites aren’t the people advisors are looking for, Shevlin said.
“Just because there are 800 million people using Facebook and 300 million people on Twitter does not mean it’s a particularly effective or useful tool for finding new clients from an advisor practice perspective.”