By Cyril Tuohy
For financial advisors, the use of social media continues to be an unfulfilled economic promise with low satisfaction rates. Most advisors say social media have had very little impact on the key metrics of their business.
About half of advisors who participated in a recent poll — 53 percent — perceived social media to be important. Only 49 percent said they were satisfied or somewhat satisfied with the results achieved from using social media, according to consultant Howard Schneider.
Social media, though, are not going away. A majority of advisors said they expected to deepen their knowledge of social media as they became more familiar with it, Schneider’s study found, according to a new 78-page report.
“A positive aspect is that financial advisors use social media, but they need more help not on the why but the how,” Schneider told InsuranceNewsNet. “They need more clarity about the advantages and benefits of doing so.”
Schneider, president of the independent wealth management research firm Practical Perspectives, said many advisors appear to be dabbling in social media and missing out on the related opportunities.
That’s a sign that many advisors are still on the fence regarding the impact of social media on their practice, especially relative to other business priorities, Schneider wrote in the report titled “Financial Advisors Use of Social Media – Insights and Opportunities 2015.”
Schneider’s report, based on responses in October and November from 585 full-service brokers, independent brokers, financial planners and registered investment advisors (RIAs), offers a snapshot of how the average advisor approaches social media.
He’s not talking about heavy social media users such as financial planner Bill Winterberg with thousands of tweets and 11,000 Twitter followers, or about firms such as LPL Financial with aggressively-promoted social media platforms.
Many users, he said, "have limited experience and want more training and support, especially on how to use social media to develop new business,” Schneider said. “Many advisors admit that social media has yet to achieve the results they expected.”
Among the four advisor categories — RIA, independent, regional and wirehouse — wirehouse advisors are the least likely to perceive social media as important while regional advisors ascribe the highest importance to social media.
Only 6 percent of advisors said they were “very satisfied” with the results achieved from using social media and 43 percent billed themselves as “somewhat satisfied.” The survey also found that 24 percent were “less satisfied” and 27 percent “not satisfied.”
Advisors often cite compliance and regulatory issues for holding back from mining social media for all it offers, but for some that’s simply an excuse, Schneider said.
In the past 12 months, social media have had “minimal influence” on practice metrics such as generating new revenue, delivering new referral sources, new clients and new prospects, or gathering new assets, the survey found.
Schneider said he’s not surprise by the results, “but it seems inconsistent with the attention that is being given to social media.”
News reports about advisors building an entire business from scratch using social media tools are the rare exception, and it’s going to take more time for mainstream advisors to integrate social media tools into their practices, he said.
LinkedIn is by far the social media site with the most impact on advisors across each of the four advisor channels, with three out of four advisors indicating LinkedIn is the most influential platform, five times greater than Facebook.
Although social media are not contributing to advisors’ bottom lines, most advisors use some form of social media and expect their usage of the medium to continue in the future.
Advisors, like many other users in other professional settings, use social media as a way to connect with peers and other influential people within the industry, gather information and insights, and learn about different perspectives.
Chris Andrews, a financial advisor with Northwestern Mutual, peruses social media sites to keep up with life changes going on with his clients in preparation for a client meeting, which reinforces his relationship with clients.
Offered freely through social media sites are life changes such as a work promotion, a home purchase, marriage and congratulatory messages.
RIAs and independent advisors viewed social media as having the greatest impact on helping advisors build their brand and image, and RIAs were more likely to believe social media helped them stay ahead of their competition, Schneider found.Regional advisors found social media helpful with gathering new information and insights, connecting with spheres of influence and retaining clients.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
© Entire contents copyright 2014 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.