Social media works, Grandpa, so use it.
While many 401(k) advisors grumble about the time and supposed low return seen from Facebook, LinkedIn and other social media marketing outlets, the Financial Planning Association has definitive proof of a direct link (as if one was needed).
“While 30 percent of financial advisors do not see any connection between social media activity and new business, the majority see a direct or indirect link to growth,” FPA reports in its joint study with LinkedIn titled “Communication Evolution: Financial Professionals and the Future of Thought Leadership and Social Media.” “In fact, 67 percent of high growth firms say they added new clients directly as a result of social media activity.”
The fastest growing advisory firms are investing in thought-leadership and social media to attract and retain clients, but it’s client behavior that’s influencing the way in which the most successful advisors communicate and the tools they use. The study also sought to understand what clients and prospects are looking for from advisors. It found:
- Client engagement is not only about the advisor’s expertise, but the extent to which he or she helps clients make informed decisions through meaningful education.
- Social media is becoming a key part of the new business development process, including an advisor’s ability to attract referrals.
“In today’s fast-paced, technologically advanced world, advisors who are not embracing social media and more dynamic ways of engaging their clients and prospects are going to lag behind those practitioners and firms that are,” said 2015 FPA President Edward W. Gjertsen II, CFP. “As a financial planner, I know that those I work with expect that I will help them better understand their finances and their financial decisions. While social media and online content can be an avenue of brand development for many advisers, too many are unsure how to approach it so it will not be onerous and lead to real results.”
The study identified a strategic response (thought-leadership) to providing what clients and prospects want and a tactical response (social media) for delivering it.
The Strategic Response to Client Behaviors – High growth firms recognize that they can respond to both client and prospect needs and behaviors by focusing on three key communications strategies. Compared to low growth firms, they are more likely to offer educational events, leverage professional networks on LinkedIn, and focus on thought leadership activities. The impact of those activities may contribute to the success those firms have achieved. Forty-one percent of the high growth firms—identified in the study—experienced asset growth in excess of 30 percent. Just 11 percent of all respondents achieved that level of growth.
The Tactical Response – While social media is acknowledged—by respondents—as an important way to communicate with younger clients, it is further seen as a way to build deeper relationships with existing clients and build credibility. The data shows that:
- High growth firms are more likely to execute thought leadership strategies via social media.
- Advisors use different professional and social networks to meet different objectives. LinkedIn is seen primarily as a way to find new relationships, Facebook to maintain and deepen relationships and Twitter to listen and learn from others.
- While many advisors cite compliance restrictions as the reason they do not use social media, almost as many say they are unsure how to use the networks effectively, or they do not feel they are appropriate for business.
Going forward, advisors will de-emphasize passive uses of social media (e.g. listening and learning from others) and focus more on using social media to actively build cred
