Social Media as Effective Communication Tool


 Is social media an effective communication method for financial advisors?

It certainly works for the President of the United States. Twitter has become the preferred method for President Donald Trump to reach the members of the citizenry who choose to “follow” him on the social media site, which limits users to 140 characters per “tweet”.

But financial advisors are apparently under different constraints than the President of the United States. Compliance regulations prevent financial advisors from being too specific about advice they give in forums such as Facebook, Twitter or LinkedIn.

Yet, today’s investors, especially the younger ones, want to communicate via social media. They tweet and post more than they call or email. It’s the way of the world.

But is it an effective way to communicate a message related to financial concerns?

Spectrem’s study on the communication needs and habits between advisors and investors answers that question. In Effective Communication Techniques: Attracting and Retaining Current and Next Generation Clients, investors detail their current social media habits and whether those habits can translate into communication with financial advisors.

“Within the guidelines set by federal regulations, advisors are allowed to communicate via social media,’’ said Spectrem president George H. Walper Jr. “The question is whether investors read their communication sent to them by social media, and if they take it to heart. Otherwise, it is not effective communication.”

The Spectrem study looked at two groups of investors, Millionaires with a net worth between $1 million and $5 million and Ultra High Net Worth investors with a net worth between $5 million and $25 million. Among Millionaires, 58 percent use Facebook, 37 percent use LinkedIn and 11 percent use Twitter, although those percentages are higher for Millennial and Gen X investors, all of whom are under the age of 52.

The percentages are similar for UHNW investors, although they are higher for LinkedIn usage. The three websites serve different purposes. LinkedIn is designed as a business connection site, and invites users to demonstrate their expertise in a particular field. Twitter is where quick thoughts are offered, and the “follow’’’ concept provides a strong connection between users. Facebook is more for readers, and invites more presentations of articles.

Investors connect with advisors through these websites, and appreciate when their advisors communicate in that fashion. More than 70 percent of Millionaires and UHNW investors claim satisfaction with the way their advisor communicates via social media.

Twitter is a different animal than either Facebook or LinkedIn. Its usage is less pervasive, but 35 percent of Millionaire Millennials are on the site and 41 percent of Gen X and younger investors use it. They expressly use it to follow family, friends and political and news commentators.

However, approximately 26 percent of Twitter users follow financial or investment commentators. Less than 10 percent of Twitter users follow their financial advisor, but that may be because their advisor does not use Twitter.

The question for advisors is “Do you have a Twitter handle for your business?” IF the answer is “No’’, it begs the question “Why Not?”

While there are limits to what advisors can offer via social media, there is some messaging that can be sent regarding attention to accounts, current events links and alerts that can send investors back to your website.

The Spectrem study also looked at effectiveness by asking investors if they pay attention to financial advertisements on social media sites. Asked to place their attention on a 0-to-100 scale, Millennial Millionaires placed their attention to financial advertisements on Twitter at 56.89, which is a strong indicator of interest. Among UHNW Millennials, the rating was just under the midpoint at 48.13.

Interest among older investor was much lower, but they are the ones reading the newsletters that get sent out.

Interest in financial advertisements on other forms of social media are lower. Among Millennial Millionaires, the interest on Facebook was at 32.00, on LinkedIn at 39.13 and on YouTube at 26.93.

The Spectrem study included interview responses with investors, and their take on social media indicates the importance for financial advisors to have a presence.

“My financial advisor posts about three times a week on Facebook,’’ said one investor. “I read them, unless they are something that doesn’t pertain to me.”

“If I am on LinkedIn and there is an article that is of interest to me, I will click on it,’’ another investor said.

Top Takeaways For Advisors

There is no reason not to have a social media presence. As long as compliance guidelines are met, any social media post you offer will be read or viewed and each engagement is an opportunity to increase business. Keep in mind that social media is free of charge! Having a dedicated social media attendant will pay off.

While Facebook is more for readers and Twitter is best designed for quick hit comments and links, YouTube is another effective social media sites. Many investors enjoy watching financial videos, and they can help personalize any topic. Some firms even have dedicated YouTube channels. Videos are an effective way to make a complicated topic seem less complicated. Use it.


©2017 Spectrem Group