For Many Advisors, Social Networking is Socially NotWorking

An increase in tweets does NOT equal an increase in dividends  

There may be certain areas where social media just doesn’t help. According to a recent report, it’s been a big bust for most advisers so far. “I think to a certain extent, the hype around social media has been overplayed,” said Ron Shevlin, senior analyst with Aite Group LLC. “For many advisers, especially those who were not good marketers to begin with, they keep hearing ‘You gotta be on Facebook and Twitter,’ but they get on and it doesn’t produce any results.”

A new report from Aite Group analyzes financial advisors’ use of and attitudes toward social media. This is the fourth in a series of reports based on a Q1 2011 Aite Group survey of 437 U.S. financial advisors; this report compares current advisor views of social media with advisor views from Aite Group’s December 2010 report on financial advisors’ use of social media. Although the use of social-media has increased from 2009, with just under half of advisors saying they use some form of social media professionally, but far fewer advisors said that it did them any good.

Inside the numbers

Of those reporting, 19% said they reached new prospects, a marked decrease of 36% two years ago. Only 6% said it helped increase revenue, also down from 16% two years ago. The stories about an advisor gaining a client from an insightful tweet or blog post probably have more to do with good marketing than the social media involved, he said. “Those are the exceptions to the rule.“

“Some advisors are stymied by compliance rules that require they get every tweet and blog post approved, a process than can take days or weeks, a lifetime in social media,” said Mr. Shevlin. “It isn’t much of a help to stick to bland statements to avoid compliance issues,” he said.

I have to cut through a lot of this report. As a former financial advisor, my clientele was based first on face to face meetings, and then enhanced by performance and word of mouth referrals. I completely agree with the compliance issues, although once you have a statement or statements approved, it can be used over and over again.

I believe it’s a good idea to have a Facebook or LinkedIn page. I wouldn’t count on this as a prospecting tool. Think of it as a way for current clients to make contact or as an enhanced biographical tool. It’s important to note that as Generation Y or the Millennials begin to invest and accumulate wealth we may see a greater increase in the social media connection. According to Shevlin, “That generation is so reliant on social media, they will look to see if advisors are on Facebook and Twitter, but we are not there yet.”

I am of the firm belief that it’s all about showing someone the money. In today’s landscape of information technology, it’s incredibly easy to not only meet the returns on the S & P 500 (a financial benchmark often used), but also to beat them. For those advisors that want more business (a larger book), I suggest you do your job and your homework and increase your current returns.

Think about this from the Gen Y’s point of view, are they going to tweet and twitter about an advisor that barely beats the rate of inflation or one that consistently pounds out 12 to 25% year after year returns. Common sense dictates that answer, and it’s a very simple one. For those advisors seeking to earn more money and a larger book, spend the extra time to make your existing clients money – the rest will fall into place.

 Source: Aite