The Markets July 21, 2010

Advisers Use Social Media to Drive Growth, Connect with Clients

A new study from BNY Mellon's Pershing Advisor Solutions finds nearly half of RIAs work for a firm that has a written policy governing the use of social media tools, and among those firms 81% prohibit or limit the use of social media.
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Still, among RIAs already using social media, 42% said it has helped them reach new prospects, 31% credit it with helping them to generate awareness of their business, and 27% with helping them differentiate themselves from their competition, according to Creating Growth: The Increased Use of Social Media by Independent Advisors.

Although RIAs who use social media on average manage fewer assets and advise fewer clients than those who do not, the survey found that they have experienced higher growth in terms of revenue, assets, and clients advised. One in five advisers attributed increased revenue or fees from existing clients to their social media-related efforts.  

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Users are not limited to younger RIAs, either. While more than half of advisers under 30 do use social media for professional purposes, so do 48% of those in their 30s and 42% of those in the 40s. The most common social media tool advisers reported favoring is LinkedIn (53%), followed by Facebook (39%), and Twitter (27%). Twenty percent even reported having a professionally-oriented blog.   

To receive a copy of the study, please contact Pershing Advisor Solutions at (800) 445-4467 or via e-mail at pasinformation@pershing.com.   

Data & Research July 21, 2010

More African Americans Cut 401(k) Deferrals during Downturn

The latest Ariel Black Investor Survey found that African American investors were twice as likely to have cut their 401(k) contributions to survive the recession than were their white counterparts.
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An Ariel news release said 22% of non-retired blacks (compared to 14% of whites) borrowed or withdrew money from a retirement account, while 27% of black 401(k) participants (compared to 16% of whites) reduced their deferrals.

Ariel said that is particularly disturbing news for African Americans because the median amount blacks contribute to their retirement plans is $230 per month, compared to $337 a month contributed by whites. The median assets blacks have accumulated in their current retirement plans is about half the amount that whites have accumulated: $56,000 compared to $106,000, Ariel said.

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The survey found more whites were hurt by the recession than blacks in two areas: 63% of whites (compared to 45% of blacks) lost money in their retirement plans, and 39% of whites (compared with 29% of blacks) lost money outside of retirement savings.

The economic downturn has also severely impacted the retirement plans of many African Americans, according to the data.  In 2006, 40% of blacks planned to retire before they turned 60, compared to only 22% of whites. This year, only half as many African-Americans—21%—intend to retire before 60, compared to 14% of whites.

According to Ariel, nearly half of all blacks (compared to 31% of whites) dipped into savings to make ends meet in the last two years. This year, the median amount black households reported saving on a monthly basis is $189, compared to $367 among white households. The 2010 findings mark the first time in a decade that African-American households have reported saving less than $200 per month.

“In times of economic hardship, people have to make difficult decisions,” said Mellody Hobson, Ariel President, in the news release. “Unfortunately, the resulting tradeoffs mean many in our community are slipping even further behind.”

Additionally, 43% of blacks and 29% of whites report making “significant” changes to their lifestyle. Eight in ten African-Americans, and seven in ten whites, say they have cut back on spending in the last two years. In contrast, when the economy faltered in the months following 9/11, only about three in ten African-Americans and two in ten whites said they had been spending less money, according to the 2002 Black Investor Study.

 

 

Black Stock Market Investors  

The percentage of black stock market investors also continues to drop. Ariel said. This year, while the white investment rate held steady at 79%, the black investment rate is at 60%, continuing the downward trend from 68% in 2004, 64% in 2006, and 62% in 2008.

The latest data show that for the first time in the survey’s twelve-year history more African-Americans are choosing stocks and stock mutual funds as the “best investment overall” relative to real estate. Only 30% of blacks said real estate was the “best investment overall” this year, compared to 41% who picked stocks or stock mutual funds. Among whites, 27% chose real estate compared to 55% who chose stocks and stock mutual funds.

Despite being hurt by the recession, African-Americans are considerably more optimistic than whites, with 75% of blacks describing themselves as “hopeful” about the current U.S. economy. In comparison, just 41% of whites describe themselves as hopeful. Only 46% of whites feel their personal financial situation will improve over the next year, contrasted with 68% of African-Americans.

The survey included 501 blacks and 505 whites with household incomes of at least $50,000.

 

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