Social media is no longer new. By now, your firm has made a decision to use it for business
(or not). The question now is, has it been worth it? In essence, is social media a profitable practice for Canadian advisors?
When I began writing this piece, I had a pretty firm belief in the power of social media. As the marketing manager of a mid-sized Canadian software company, it’s practically in my marketing bible to say yes. Yes, social media is vital for small business owners, and yes, there is an ROI when it’s applied effectively. However, over the course of researching and writing this article, my thoughts have shifted a little: Social media is a powerful tool, but only for some of us.
Although Canadian financial firms are embracing social media, acceptance in wealth management hasn’t been easy. Compliance has always proven to be a grey area, so many practices have decided to circumnavigate the entire idea.
In 2011, when IIROC finally established guidelines for social media use, there was a lot of chatter about where social media would lead the profession – how big of an impact it would make? Looking back, Lisa Langley, who was president at International Product & Service Group at the time, made perhaps the most accurate prediction: “There are many firms who’ll resist opening up to social media, but those who grasp it will have a competitive advantage.”
Regulations aside, the other, more obvious (and less discussed) reason many advisors sidestepped social media altogether is that nearly a third of the industry is made up of an older demographic who are less inclined to get involved for lack of knowhow. According to a Wealth Professional survey, more than 30% of Canadian financial advisors are over the age of 55. The average successful advisor has been in business for 14 years and is in his or her late 40s to 60s. This age group would have just missed the social media explosion and may not be particularly adept (and/or enthusiastic) about taking on social media.
PLATFORM IS KEY
Despite the reluctance, there’s an upward trend of social media use in financial services, and we shouldn’t expect a stall in growth anytime soon. Over the next two to three years, Canadian advisors expect to increase their use of social media: According to a 2014 report from Mackenzie
Investments, 60% say they will use it to build their brands or profiles, while 52% will use social media when prospecting for new clients.
Whether social media is profitable for business depends on how it’s used and, apparently, the platform.
“While there is a business case to be made for Facebook and Twitter, if a financial advisor wants to see the biggest bang for their buck, they should master the use of LinkedIn,” says Charlie Van Derven, president of Social Advisors. “As most financial advisors’ business development is dependent on referrals and personal introductions, LinkedIn is the most relevant social media platform.”
LinkedIn is the most used social network in the industry (68% of Canadian advisors have a LinkedIn profile) and definitely seems to deliver the most value. Part of this can be attributed to the fact that LinkedIn is ‘the professional network,’ and users aren’t just there to be entertained. Advisors who see the most success (read: engaging referrals and prospects via LinkedIn) are actively finding ways to participate in conversations and find their niche, which can be time consuming.
According to Van Derven, “a huge majority of affluent people don’t like being asked for referrals. LinkedIn facilitates introductions, which is what most advisors are looking for.” He says the best way to get introduced to the right people is to ask your existing clients.
“LinkedIn literally shows you who your connections know. If you’re connected to your clients on LinkedIn, it’s likely they will be connected to other people in your niche.”
But, cautions Van Derven, don’t use LinkedIn’s in-message mail to connect. Instead, pick up the phone and call your client or connection and ask for a personal introduction. “The in-app message on LinkedIn has a pretty low return rate, but a phone call is personal and effective.”
We all know too well how quickly technology evolves. So, what’s the next social trend? According to Amy McIlwain, president at Financial Social Media, there’s already a big movement toward paid advertisements on social platforms.
Imagine being able to duplicate the demographics and characteristics of your best clients in virtually every way. With sponsored (or paid) ads, it’s possible. Social media networks like Facebook and LinkedIn collect masses of data that users willingly hand over, making it easy to get in front of precisely the right audience.
“With the robust amount of data that Facebook gathers on individual users, advisors can pinpoint an audience based on a huge range of data, including net worth, income, zip code, age, company, profession and even behaviours such as likelihood of needing a full service investor,” McIlwain says. “By targeting exactly the right person at exactly the right time with exactly the right message, advisors can expect to see a high return on their investment.”
One key to a successful social strategy is knowing where to find your audience. “Don’t waste your time on channels that your target audience doesn’t use,” McIlwain advises. If you’re not sure what social media platforms your audience uses, start by asking clients.
Categorizing social media as ‘marketing’ can be a bit of a catch 22. If we consider social media part of marketing, it can easily turn into a promotional campaign that, in turn, is easy for consumers to ignore. However, using social media to organically share your expertise and provide value to a targeted niche can keep it authentic and be profitable, but it requires more time, effort and genuine elbow grease.
So, is social media a profitable practice for Canadian advisors? Yes, but with a huge caveat: It must be applied authentically and with purpose. The ability to consistently illustrate your firm’s value proposition by sharing meaningful information (for free) is a huge benefit.
This is a slightly amended version of an article written by Maggie Crowley (@crowleymaggie), marketing manager for a global leader in website software for the financial industry. It has been shortened to make it suitable for web publishing.