Financial Advisors Not Seeing the Benefits of Social Media: Survey

In the investor-advisor relationship, communication is key. Millionaire households surveyed by Millionaire Corner are big on face-to-face meetings, telephone and email, but nearly all report that their advisors have not taken the social media leap.

Nearly all (92 percent) said that their advisor does not write a blog, post on Facebook, or issue tweets. But this does not seem to be a priority for them. Ninety-six percent replied “none of the above” to which of these communication channels they would like their advisor to use.  

This may account for social media’s low standing among financial advisors recently surveyed by Aite Group. Out of the 437 advisors polled, only 19 percent said that social media was useful for reaching prospective clients, down from 36 percent in 2009. Respondents also said they did not see other purported benefits of these communication channels. Six percent said they have seen an increase in revenues or fees from using social media, a decrease from 16 percent in 2009. Only nine percent—down from 21 percent three years ago--said it differentiated themselves from the competition, while 18 percent said it was useful in generating awareness for their practice, a drop of five percentage points from three years ago.

Eight percent did say it had improved their ability to communicate and interact with clients, an increase of seven percentage points over three years ago, while the percentage who said they used social media to establish their expertise and credentials was unchanged at 11 percent.

One communication tool is deemed more beneficial to advisors. The Aite Group survey found that professional use of LinkedIn was up 10 percent since 2009. Professional usage of Facebook fell 10 percent, Twitter dropped 8 percent, and personal blogging was down 9 percent.

Younger people traditionally embrace the newest technologies, and can be discriminating. For example, Millionaires we surveyed under the age of 55 were most likely to rate their advisor’s blog as poor (29 percent) or excellent (15 percent), and were least likely to deem them satisfactory as nearly three quarters of Millionaires over the age of 55.

This indicates that as financial advisors’ client base moves from baby boomers to Millennials, there is potential for social media to play a more active roll in client communication, observed Aite senior analyst Ron Shevlin. “It’s not that the tools don’t work,” he is quoted by Reuters, “it’s that (advisors are) not making effective use of it right now.”