Pershing Advisor Solutions recently announced the availability of a new study, “Creating Growth: The Increased Use of Social Media by Independent Advisors” which explores the role of social media usage by registered investment advisors (RIAs) to increase business development and manage client interaction.
The growth of networks such as Linkedin, Facebook and Twitter has had a positive impact on all industries, however, useage levels have been fairly slow in the financial industry. RIAs are developing ways to utilize social networking to grow their business, the creating growth study was based on feedback from 144 U.S. based RIAs out which one third were employed at firms with more than $1 billion assets under management and 37% were working for firms with less than $100 million under management.
Key highlights from the study include the following:
Social media activity pays off:
Among RIAs using social media, 42% said it has helped them reach new prospects, while for 31% it has helped to generate awareness of their business and 27% credit social media with helping them differentiate themselves from their competition. Social media has produced tangible financial results as well. One in five attributes increased revenue or fees from existing clients due to their social media-related efforts.
RIAs that use social media outperform other advisors:
Although RIAs who use social media on average manage less assets and advise fewer clients than other RIAs, the survey found that they have experienced higher growth in terms of revenue, assets, and clients advised.
LinkedIn tops Facebook, other tools for RIAs:
The clear favorite is LinkedIn which is used by 53% of advisors who use at least one social media tool, while 39% use Facebook and 27% use Twitter. One in five advisors who use social media have a professionally-oriented blog.
Social Media is not limited to younger RIAs:
While just over half of RIAs under the age of 30 use social media on a professional basis, almost as many in their 30s (48%) and their 40s (42%) are using social media for business.
Many firms remain hesitant to endorse social media:
Financial services firms’ attitudes and policies toward social media may be discouraging its use among advisors. Nearly half of RIAs work for a firm that has a written policy governing the use of social media tools. Moreover, among those firms, 81% prohibit or limit the use of social media. Among RIAs not currently using social media tools on a professional basis, just 16% are likely or very likely to start using LinkedIn in the next year. The percentage of RIAs that plan to start using other social media tools is even lower.
Mark Tibergien, chief executive officer of Pershing Advisor Solutions, said, “Social media is a juggernaut, and RIAs can’t afford to dismiss the opportunity it affords them to engage clients and enhance their visibility with prospects. When developing a strategic marketing communications plan, RIAs need to consider the benefits of incorporating social media into an integrated marketing communications plan. They also need to understand the risks – regulatory and otherwise – of making social media a tool in their public positioning.”
Ron Shevlin, senior analyst at Aite Group added, “Considering the benefits and business impact they have experienced, it is not surprising that RIAs who use social media on a professional basis are more likely than other advisors to consider social media important for the future. Still, many advisors will be challenged by their firms’ decisions to limit or prohibit the use of social media because of regulatory and compliance concerns, as well as other factors.”
Source: Pershing Advisor Solutions