Financial Advisor IQ, September 1, 2016, Murray Coleman- 401(k) Advisors lack Critical Tech Understanding


The rise of robos in an era of increased regulatory scrutiny is leading top RIAs to step up their game as technology innovators. But in the retirement savings space, while back-office providers are adjusting to a fast-evolving landscape, a new report suggests many defined contribution advisors may not be as tech savvy.

A critical lack in understanding of how – and when – clients are using different types of social media tools is undermining consultants’ use of such technologies, according to market researcher Eric McDonald.

“Advisors certainly understand that services like TwitterLinkedIn and Facebook are already being widely adopted by investors of all ages,” says McDonald, an analyst at the Spectrem Group in Lake Forest, Ill.

But nuances are developing in usage patterns that too often go unnoticed, asserts the author of the recently released “Using Social Media and Mobile Technology in Financial Decisions.”

“We’re finding that advisors just aren’t using the full capabilities of social media that are available to them,” says McDonald.

Such communications portals are prized by different types of DC plan participants at different times, he points out. For example, the group’s analysis of digital trends finds that more than 70% of 1,135 retirement plan participants surveyed went on Facebook daily.

“Surprisingly, LinkedIn is more a weekly read for most people,” says McDonald.

By contrast, Twitter draws relatively well on both a weekly and daily basis, he adds. That’s probably driven by the electronic messaging service’s appeal to users of mobile applications, figures McDonald.

“Even a typical DC plan participant is now very active as a user of mobile apps,” he says.

And age is becoming less of a distinguishing factor, warns McDonald. Of those Millennials questioned, 89% tell Spectrem they regularly use Facebook. At the same time, 69% of Baby Boomers are also active users.

Besides taking a closer look at developing different strategies for each unique social media service, some DC plan advisors urge those in the industry to stress a clear and consistent message across all platforms.

“Clients keep hearing about the need to save through their retirement plans at work,” says Jacob Hong, an advisor at Archford Capital Strategies. “But we’re seeing a real lack of follow through in terms of plans making available concrete tools and content to help employees understand all of their investment choices.”

The RIA, which is based in Swansea, Ill., and manages about $500 million, has been developing online “dashboards.” The tool gives plan participants an aggregated view of family spending patterns over time.

“People always want to save more, so this is a tool to help them develop ideas about new ways to manage household cash flow at any given time,” says Hong.

He is yet to use social media in combination with tracking spending patterns. But in the works are plans to offer links to LinkedIn and Twitter feeds to drive more viewing of such data.

“We’re trying to use traditional media along with social media to feed off one another,” says Hong. “If done as a cohesive package it can have a real powerful impact.”

Sean Deviney, a retirement plan specialist at Provenance Wealth Advisors in Fort Lauderdale, Fla., does much the same. But his team stresses fresh content, posting new articles and blogs on Facebook, LinkedIn and the firm’s own portals several times a week.

Then, along with marketing staffers at the indie RIA, which manages about $2.1 billion, Deviney sends out alerts to investors using Twitter. Priorities of what goes up where and when, he says, also follow a realization that major social media outlets implement "different sets of algorithms to judge each user’s favorite clicks.”

That means social media campaigns need to be fluid, and offer investors a wide range of content from internal and external sources, adds Deviney.

As a result, he finds that his 401(k) consulting group is more effective -- and cost effective -- by leveraging social media resources used by advisors working with high net worth families.

“We try to keep our message the same to both retail and DC audiences,” says Deviney. “In our experience with social media, a cohesive strategy gives our content more consistency and relevancy across all of our firm’s various media channels.”


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