Nice to Have, But Not a Replacement

Social media should complement rather than replace an adviser’s marketing plan, and advisers should move cautiously since missteps can cost, research found.

Social media is not yet proven as a primary marketing strategy, said a study from The Northwestern Mutual Granum Center for Financial Security at the American College, but advisers can use it to influence and educate clients.

The study, “Media Puff or Real Stuff?” surveyed financial advisers as well as consumers to help financial professionals better understand how to use social media credibly, safely and effectively – if at all.

“Advisers are being bombarded with messages about social media,” said Sharen King, executive director of the Granum Center for Financial Security. “There seems to be an ‘unwritten expectation’ that as an adviser today, you need to be a savvy social media expert. But what we learned is that while clients are open to receiving information to help them learn more about financial products and services, they still prefer a face-to-face conversation address their financial needs.”

Among the report’s findings:

  • LinkedIn is the place to be: Financial advisers trail consumers in their use of Facebook and Twitter. But with 31% of consumers and 36% of financial advisers on LinkedIn, the professional network offers fertile common ground for the two groups to meet.
  • Make connections with care: Although younger consumers are less concerned about privacy, more than a third of consumers overall would consider ending the financial adviser relationship if they tried to contact them through a social networking site.
  • Consumers are open to financial advice online: 91% of consumers would value tips on saving and investing posted by their financial advisers on social media sites.
  • Mine your network with care: 67% of consumers react negatively to the idea of an adviser reviewing their network to seek referrals. 

The research includes an infographic that explains the implications of the findings and helps advisers determine what they need to do next, based on where they are today.

The next generation of clients uses social media, so advisers cannot ignore it, said Jennifer DeTroye, assistant director of the Granum Center. However, “the vast majority of today’s clients are not there yet,” DeTroye said.

The survey was conducted by Matthew Greenwald & Associates for the Granum Center. 

The white paper can be downloaded at the Granum Center’s website.