To use social media or not to use social media – that has become one of today’s most commonly asked questions among RIAs. I fall into the affirmative camp – social media can be a great tool to accomplish any number of goals – growing your business, staying in contact with clients, etc.
A new study by Pershing-Aite yielded some interesting results on this topic. While the results of the study are interesting, I need to caution readers that the survey included only 144 financial advisors. Of those 144, 1/3 were from firms with greater than $1billion under management, 37% were from firms with less than $100 million and the remainder were in the middle. 55% of the respondents were hybrid advisors; 45% were fee-only advisors. A nice – but small mix of advisors. Some of the key takeaways from the article are:
1- Advisors using social media had growth rates of revenues, AUM and clients averaging 19% over the three categories, while those that don’t averaged only 6% growth in the three categories.
2- The fastest growers were big marketers in general, thus social media was only one component of their overall marketing plan; the above results may therefore be overstated (a victory for active marketing overall if not social media in particular!).
3- The biggest practices (as measured by assets) were not the biggest users of social media.
4- 43% of the respondents used social media (LinkedIn, Facebook, Twitter, blogs, etc.) professionally (67% personally).
5- LinkedIn was the most popular means of social media used, following by Facebook, Twitter and then blogs. (I am a bit surprised that blogs did not score higher, although they do require a larger time commitment).
6- One in five surveyed said that they increased revenues and fees because of their use of social media. Most (42%) said they used social media primarily as a way to reach new prospects, followed by increasing awareness of their practice, differentiation themselves and then increasing revenues.
7- The primary reason cited for not using social media was compliance, followed by regulatory concerns and negative publicity.
Overall, these results are interesting and not surprising. The jury remains out for many Advisors as to the benefit of using social media. The positive of this reluctance by some is that it makes those advisors that do use social media stick out that much more!
