Financial Advisers Leverage Social Media for New Business

Putnam Investments’ latest online survey of adviser found 85% used social media in their day-to-day work.

Social media has cemented its place as a lucrative tool for financial advisers, according to a new survey that points to a digital divide in the industry along demographic lines.

Among the more-than-1,000 respondents to an online survey by Putnam Investments, 85% of advisers are actively using social media in their day-to-day work, up from 75% in 2014, the survey found.

Within that group, 80% of advisers are gaining new clients via social media, up from just 49% in 2013. The median asset gain through social media is $1.9 million, while the average gain is $4.9 million, it found.

But there are still holdouts, mainly among advisers age 65 and older, the survey found. Such advisers are likely missing out on making closer connections with current clients as well as opportunities to reach out to new prospects.

“The use of social media by the financial adviser community has matured to a level where it is ingrained in how business is conducted and how professionals communicate with their clients and prospects,” said William Connolly, co-head of global distribution at Putnam.

For its fourth annual online survey of advisers’ networking habits, the Boston asset-management firm queried 1,018 financial advisers across the U.S. who have been advising retail clients for at least two years.

Respondents included registered investment advisers as well as advisers at big brokerages, banks, insurance companies and independent broker-dealers. It was conducted in July in conjunction with research and consulting firm Brightwork Partners LLC.

A typical financial adviser gaining assets through social media is 43 years old with 10 years of experience who runs a book of business with a median of $92 million in assets and is active on social media networks daily, according to the survey.

Financial advisers have broadly integrated social media into their business-building strategies, according to the survey. Fifty-six percent say it has increased their business-building efficiency “a great deal,” but only 18% say they have cut down on their use of traditional, offline business-building activities.

Asked whether social media has shortened the time required to convert a prospect to a customer compared with traditional approaches, 30% of respondents strongly agreed that it had and 55% agreed somewhat.

Anecdotally, advisers are saying that the speed and efficiency of social media compared with traditional networking, such as through the Rotary Club or golf outings, “is just tremendous,” said Jayme Lacour, Putnam’s director of social media. Advisers say they’re able to win over business within 48 hours as opposed to the monthslong wooing process that used to occur, he says.

But with adoption of social media peaking, advisers who haven’t already begun using it may be unlikely to do so, Mr. Lacour said. That may leave many older advisers behind.

Among advisers under the age of 30, 97% are using social media, while only 60% of advisers age 65 or older are using it, the survey found. Of the nonusers, 58% indicated that it is unlikely they will become adopters.

The No. 1 reason respondents gave for not adopting social media was compliance, and the second reason was they prefer other mediums or that their clients and prospects don’t use social media.

Citing compliance as a challenge to using social media is an excuse that is starting to wane, says Mark McKenna, head of global marketing at Putnam. Advisory firms are making it easier for advisers to use social media, keeping records of social media activities has become easier with new technologies and many advisers now have access to approved content that they can offer clients on social media, he says.

Advisers are combining their professional and personal presence on multiple social media platforms to strengthen their client relationships, Putnam found. Among advisers responding, 73% indicated that LinkedIn Corp. is among their preferred social networks, up from 70% in 2015, and 54% indicated that Facebook among their preferred networks, up from 47% in 2015, according to the survey.

Among respondents, 44% of advisers are using Twitter Inc., but only 12% are using it as their primary business platform, the survey found.

Advisers who are using LinkedIn and Facebook as their primary social network and who actively engage in more advanced features are seeing significant gains in business when compared with advisers who stick to the basics, Putnam said. Those who adopt multiple advanced features, including paying for premium access or content placement, are far exceeding the asset gains of advisers who take a more passive approach, the survey found.

Of those surveyed who use LinkedIn as their primary network, 33% have invested in a premium account, and 88% of those are using LinkedIn Sales Navigator, a product whose annual cost can exceed $1,500, Putnam said.

[Source:-The Wall Street Journal]