Advisers are embracing social media but are yet to realise the full business benefits, research suggests.
NMG Consulting has published its Financial Adviser Census Social Networking report, which analyses trends in the use of social networking websites among advisers.
The analysis is based on a recent survey of 214 advisers – 149 of whom were investment advisers, 47 were mortgage and protection advisers and 18 were paraplanners.
The survey found that half of respondents had used social networking sites in the past three months. The most commonly cited reasons for doing so were to follow industry news, target new clients, communicate with existing clients and exchange business ideas and experiences with peers.
Overall, 26 per cent of those surveyed use social networking to reach clients – up from 18 per cent in the first quarter of this year.
Of the advisers who use social media to speak to existing clients, they do so with an average of 31 clients. Of those who use it to target new clients, the average number of clients gained is 11.But the report points out that many of those who are targeting new clients through social media say they have yet to see any significant increase in client numbers as a result.
NMG Consulting quantitative research partner Georgina Clarke says: “Although there is high usage [of social networks], it is not necessarily having a measurable impact.
“We are not talking about huge quantities [in terms of client numbers] at the moment.
“It is positive that advisers are trying to engage with social media but when it comes down to the actual impact, it is not having a huge effect on their business. But it is early days as a lot of advisers are still getting to grips with this.”
Mitchell Moneypenny managing director Nicola Mitchell says the benefits of social media should not be framed in terms of lead generation alone. She says: “The benefits are more centred around building business contacts, sharing knowledge and developing a brand, especially when you first start out.
“Lead generation may be a benefit further down the line but advisers should not have that as their sole aim initially.”
Jacksons Wealth Management managing director Pete Matthew says engaging with social media can bring clients in but he agrees that results are far from immediate.
He says: “For social media to work, you need content to direct people to. That means linking back to a website which is regularly updated, engaging and attractive. When you get that right, business does come in, but it takes a while.”
He adds: “I was a relatively early adopter of Twitter in 2008 but it took me several years of producing video content and podcasts for social media to become a significant source of clients.”
Investment Quorum chief executive Lee Robertson says the majority of advisers are “feeling their way” with social media at the moment.
He says: “We have recently launched a Facebook and YouTube presence but it is quite new for us so we are finding our way with it.
“We believe that to build a brand nowadays, particularly among customers, you need to engage with social media and have a website which is optimised for smartphones and tablets. That said, I think the regulator is still quite uncomfortable with social media.”
The Financial Conduct Authority has previously warned firms that all financial promotions must be accompanied by the relevant risk warnings, regardless of the type of media used. It has led to some concern about Twitter, where the 140-character limit means that the inclusion of risk warnings is unlikely to be feasible.
Matthew says: “The golden rule is: don’t say anything online that you wouldn’t say in front of the regulator at a dinner party.
“As long as what you say could never be construed as advice, you will have no problems. Getting compliance right online is not difficult – I think compliance can be used as an excuse for not engaging.”
Mitchell adds that there is a lot of anxiety among advisers regarding compliance.
She says: “Advisers should not be so worried. Very few cases have been brought against firms for this type of misconduct.”
Industry experts also argue that social media is more appropriate for communications with peers and clients, rather than for adviser-provider communications.
Mitchell says: “I am not sure it is the appropriate medium for providers to communicate through.
“You cannot archive every tweet on Twitter so if advisers are relying on it for key information from providers, they may miss something.”
Robertson agrees: “I follow product providers on Twitter but the problem is, if you miss a tweet it is gone, and within minutes it can be history.”
Aurora Financial Planning chartered financial planner Aj Somal says he takes a measured approach to social media.
He says: “Social media should be part of the overall marketing strategy of a firm and I have gained clients through Twitter and Facebook before. But while it is an area companies cannot ignore, they should not rely on it solely either.
“It may not lead to direct business straight away. For me, it is more about making people aware of the services you offer.”