Advisors Flocking to Social Media, but Still Misunderstanding Clients

Advisors misperceive investors’ investment savvy and risk appetite

U.S. financial advisors view social media as an increasingly important tool to engage clients, grow their business and better understand clients’ investment, according to an Accenture survey released Tuesday.

At the same time, they significantly overestimate investors’ investment savvy and risk appetite.

Accenture’s two-part survey included 400 U.S.-based financial advisors, working for at least two years at brokerages, wirehouses, banks or as independents or representatives of regional banks or insurance firms.

It also involved 1,005 high-income, digitally savvy U.S. investors, made up of an even mix of men and women, who were current investors or intended to invest within three years and used social media at least every week.

The survey revealed that financial advisors saw the rapid adoption of digital technologies changing their relationships with clients and viewed social media tools as increasingly critical to their individual success.

  • 48% of financial advisors reported daily use of social media to interact with their clients, 60% of whom had assets of more than $20 million
  • 74% believed social media helped them boost their asset base, and 50% claimed to have successfully used social media to convert prospects into clients
  • 49% said they believed firms that failed to leverage social media would lose clients to firms that did

“The use of social media to interact with clients is a differentiator for advisors today, but it will be mere table stakes in the not too distant future,” Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services, said in a statement.

“Wealth management firms that fail to adopt social media will miss an opportunity to build relationships with clients on their terms. This is becoming increasingly critical as investors are demanding online resources to help them better understand investment strategy and advice.”

The second part of the study examined the client-advisor relationship in light of new technologies. It showed that financial advisors overestimate their clients’ investment knowledge and risk appetite.

  • 42% of advisors described their clients as “very knowledgeable” about investing, whereas just 12% of investors saw themselves this way
  • 1% of advisors described their clients as “not knowledgeable” about investing, compared with 25% of investors who self-identified this way
  • 28% of advisors saw their clients as “aggressive” investors vs. 13% of clients with this view
  • 67% of advisors claimed to have a “personal relationship” with their clients, but only 38% of clients described the relationship as “personal.”

“Our research suggests that financial advisors need to focus on better understanding their clients’ views and objectives to foster closer, more trusting relationships,” Pigliucci said. “With the explosion of ‘self-serve’ digital investment channels and increasingly complex investment products, the importance of this will only grow.

“Firms need to implement deliberate social media strategies and provide their advisors with the tools and guidance to make their digital interaction meaningful.”

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Read Social Media Is Catalyst for Investment Changes Among Affluent: Cogent on AdvisorOne.

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