In recent months, there have been a series of articles denouncing the effectiveness and utility of social media for financial professionals. While these articles posit some interesting and convincing claims, there are deeper factors to consider before discarding the undeniable benefits of social media. In the financial sector, social media’s alleged ineffectiveness recurrently stems from: weak social media strategies, lack of engagement, difficulties in determining ROI, and lack of understanding compliance issues and regulations set forth by FINRA. Below are some questions for financial professionals to consider before dismissing the notion that social media works:
In response to Reuters article: “Financial advisers see social media benefits decline: survey”:
In this article, Reuters cites a 2011 survey, “Financial Advisors’ Use of Social Media” from Aite Group, LLC. In essence, the survey compares 437 current (2011) U.S. financial advisors’ “attitudes”, “use” and “views” of social media to a December 2009 report. The survey question reads: What benefits have you seen from your professional use of social media? The participants’ views are as follows:
At first glance, this survey seems to illustrate social media’s lack of effectiveness for financial advisors. It also begs the questions:
How are the respondents measuring “established expertise and credentials”, “differentiation from competition”, and “generated awareness for practice”? Advisors must differentiate social media metrics from those of traditional marketing. It’s admittedly difficult to tangibly measure social media’s ROI. But you can bet your biscuits that if your business has a growing base of Facebook fans, Twitter followers, LinkedIn connections, and a uniquely engaging, informative blog—you will establish expertise and credentials, differentiate yourself from the competition, and generate increased awareness for your practice.
“You can't expect social media to simply make the sales for you – social media should act as the foundation of your sales funnel. It’s a place to cultivate relationships and build your brand and company’s exposure in order to set yourself up for future sales and profitable relationships.” -Amanda Hodges, Director of Marketing and Client Operations
Have advisors established best practices and developed a clear understanding of regulations and compliance issues? In a recent webinar by Socialware, 60% of financial advisors claimed that social media has made a positive business impact. Furthermore, the two biggest challenges for advisors were (1) lack of best practices, and (2) lack of understanding of compliance issues. In the financial sector, there are additional hoops to jump through when it comes to social media. Many advisors completely abandon or de-prioritize social media because of the associated regulations.
Regardless of the social media stances and processes set forth by advisors; leads, existing and prospective clients will all remain on social media networks for years to come. The value of social media significantly declines when there is a lack of education and training about compliance and regulations. It’s like buying a fancy car with all the safety features but never learning to drive. You look good sitting in the car in your driveway but unless you take it out of park, you’ll never get to where you want to be.
Which social media platforms are the respondents utilizing? It all comes back to knowing your audience and clients. If you don’t research and strategically select the best platforms for your business, social media effectiveness and growth will be dismal. There are dozens of major social media networks to choose from; most notably Twitter, Facebook, LinkedIn, and YouTube. When discerning the platforms, first familiarize yourself by observing as a consumer. How do you interact with brands and businesses? Doing this will help you better understand the perspective of your clients and prospects.
Are the respondent’s social media platforms optimized, functional, and active? In an interview, Ron Shevlin, senior analyst at Aite claims, “social media has been over-hyped and the benefits just aren’t there for a lot of advisors”. If financial advisors fail to invest time and execute well-planned strategies, then social media will in fact be “over-hyped” and doomed to fail. In order to achieve social media success, users must establish policies and best practices, engage with followers, and produce interesting, original content for the appropriate audience. It goes without question that prospective and existing clients are online. The question is: how are you reaching and engaging with them?
How long have the respondents been using social media? Social media is an ongoing, changing process. It involves trial and error, permeability, consistency, and patience. The Aite Group, LLC survey only measures the “attitudes” and “views” of financial advisors. Perhaps a more positive, patient, and proactive attitude of social media would yield better results. Success requires strategy and potentially months upon months of consistent engagement. If push comes to shove, advisors should simply hire an intern or employee to manage the social media marketing.
There are an abundance of benefits of using social media. In the online world, there are countless opportunities to plant thousands of seeds with the easy, inexpensive click of a button. While seeds may not always yield immediate revenue, they invariably establish the relationships, expertise, and positive reputation needed for business growth.