In my years of experience working with investment advisors, the No. 1 way new clients are acquired has consistently been through referrals. Referrals come through a variety of methods ranging from a passive recommendation from a happy client to actively asking clients for referrals.
Today, information is exchanged through ever-evolving and rapidly expanding social networks. As an avid Facebook user, I often find I know more about what is going on with a friend that lives 1,000 miles away than I know about my own next-door neighbor. As we are able to connect with each other using social media, we quickly find that a good percentage of our time spent online is in a social realm. In certain situations, social networks have become our preferred communication and stay-in-touch method. As a result, this has created a huge opportunity for advisors to connect with existing clients, seek out referral opportunities and grow their business.
For most advisory firms, social media is used by your target market. In the market segment of consumers age 55 and older, over 27.4 million individuals indicated they use social networking, according to comScore, a digital measurement company. Even more staggering, Pingdom.com studied data from Google Ad Planner and found the majority of social network users are individuals over 35 years old. For many advisors, professionals 35 years and older represent their target demographics. Instead of social media, think social marketing.
In fact, social media is on fire when it comes to client acquisition. Advisory firms using social media are growing faster than their counterparts not using social media—three times faster in terms of annual revenue, AUM and client base, according to Aite Group’s Q4 2009 Advisor Survey.
What is driving this growth? Social network referrals. Hopefully, you are now asking yourself, “How can using social networks lead to more referrals? How are firms using social media growing three times faster?” The answers are easier than you might imagine:
Set up your profile on the social networks. Take the time to set up your profile on Facebook, LinkedIn, etc. Make sure that as you do, you hook in your compliance archiving tools and that what you are doing complies with your firm’s social media policy.