The use of social media such as Facebook, Twitter and LinkedIn are increasingly playing a larger part in clients’ day-to-day lives but the use of social media can be divisive, with some advisers taking to it enthusiastically, while many other fail to see the point.
The use of social media is big business. Facebook’s flotation last year did not go particularly smoothly, but it still raised $16bn and valued the company at more than $100bn. The aquisition of Instagram by Facebook valued the photography platform at $1bn only two years on from its launch. Twitter, the other big name in social media currently has in excess of 500 million registered users and expects its advertising revenue to top $1bn in 2014.
According to recent research from Cogent Research and LinkedIn, more than 5 million affluent investors use social media to research their financial decisions.
However, in a recent survey conducted by the Institute of Financial Planning and Financial Social Media, one third of advisers said they do not know how to use social media within their business and more than a quarter said they do not have the time to invest in a social media strategy.
Financial Social Media UK president Bridget Greenwood says the use of social media can help to attract clients to the business if used in the right way as well as help cement the relationship between the adviser and client.
She says: “If the adviser is following the client [on Twitter], there are a lot more points for the adviser to reach out, contact their client and say – fantastic, really pleased about the birth of your grandchild, for example. The more that the client does that with the adviser, the more likely the client is to recommend them to other people.”
It is clear that some advisers remain dubious that the use of social media will help increase their client base.
Jacksons Wealth Management managing director Pete Matthews (pictured) is an enthusiatic user of social media to communicate with clients and raise the profile of the firm but he says there are good reasons for advisers to remain cautious about adopting social media in to their businesses.
Matthews says: “The main reason why I think [social media platforms] will never be primarily one-to-one communication mediums is that they’re not durable platforms. Facebook might not be here in two or three years time. Relying on a medium like that for client communication I think is very dangerous.”
Another advantage is the ability for advisers to communicate with each other and share best practices.
Greenwood says there is a growing expectation from clients that financial advisers will use social media.
“I am used to going on Twitter and finding out more about someone. I am used to googling a product, a holiday or a service and then finding out what other people say about it and what they say about themselves across social media channels. I am used to communicating that way. If I can’t find someone who does, I discount them,” says Greenwood.
But some advisers don’t necessarily believe all firms have to follow the social media route in order to retain a successful business going forward.
Evolve Financial Planning director Jason Witcombe says there are still many financial advice firms, particularly smaller businesses, who still rely on word-of-mouth and more traditional networking methods and this works for them. While Matthews says if a business already has all the clients it needs, there is no reason it should feel pressured to incorporate social media into its strategy to increase clients.
Matthews says: “If you are a one man band and have already got 150 clients and are comfortable, then there is no need to be finding more clients or feeling pressured in to using social media. Some people are more naturally inclined towards online methods than others and you have to grow that way, you don’t have to be something that you’re not.”
Some advisers believe they do not have the resources to invest time in the use of social media, particularly blogging where more input is required and they may not necessarily see any return on investment.
“We have to be realistic about use of the precious resource that is our time. We’ve got seven advisers. If we had 50 advisers I am certain we would have someone dedicated to writing blogs and sending out tweets and that would be a really useful exercise,” says Witcombe.
However, Matthews disagrees with advisers who say they have no time to invest in social media.
He says: “If people see it as valuable they will make the time to do it. People want to see return on investment as time and possibly money but people need to understand it is incredibly slow burning. You can’t say – we’ll set up a blog, write five posts and expect clients to come flooding in because it doesn’t work like that.”
A new service from Panacea Adviser is aiming to fill the gap for advisers who want to be more active on social media but feel they lack the time or knowledge to do so.
Panacea Social Stream offers to provide advisers with a selection of content for use on various social media platforms for a monthly fee. After an introductory period, the service is going to cost £708 for a year or £119 a month with no minimum contract term. Panacea is also offering a second level of service which will provide bespoke content and the cost will be determined by what each business wants.
Plan Money director Peter Chadborn says the idea sounds like a good one but advisers should perhaps be cautious about using standardised content.
“My concern would be that social media can be effective, but it has to be very fluid, very natural and very personal. I think if the audience gets a sense of seeing anything that has been formatted, then it is not going to have the desired effect. You can put loads of stuff out there but nobody is going to be reading it.”
Another concern is the cost of what is otherwise a free to access media.
Matthew says: “For those just getting started I think it could be a good steeping stone. Anything worth having is worth paying for. I’m sure Panacea will do a good job in helping people to get going.”
“In my opinion, I don’t know why anyone would pay for social media.”
Another area of concern for advisers who are new to social media is ensuring they remain compliant and using an outsourced service could address these issues.
The Finance and Technology Research Centre director Ian McKenna (pictured) says advisers are right to be wary.
McKenna says: “One-to-one social media interactions could include advice and that is where organisations need to be careful and attend to their record keeping obligations in the same way as everything else.”
However, some advisers believe social media compliance is nothing more than common sense.
Solomon’s IFA principal Dominic Thomas says: “Everyone should post or tweet with a clear sense of responsibility. ‘Would I say this in a room of people that I respect? Would I say this to their face’? Healthy self-checking is sensible. If they still have concerns, then don’t do it. Keep away from giving specific advice.”