In recent months, there have been a series of articles questioning the effectiveness of social media for financial professionals. One Reuters article, “Financial advisers see social media benefits decline,” sites a Aite Group survey that compared 2011 attitudes, use and views of social media to 2009 results. But before dismissing social media as a marketing tool, financial professionals should examine the evidence carefully.
The Aite survey asked 437 U.S. financial advisors, “What benefits have you seen from your professional use of social media?” Possible answers included “established expertise and credentials,” “differentiation from competition” and “generated awareness for practice.” Some advisors reported that they did not see the benefits of using social media.
The problem is that it can be difficult to measure social media’s ROI. The sales metrics of traditional marketing do not accurately reflect the benefits of social media. However, there can be no doubt that if your business has a growing base of Facebook fans, Twitter followers and LinkedIn connections as well as an engaging, informative blog, you will establish expertise and credentials, differentiate yourself from the competition, and generate increased awareness for your practice.
It is also important to take steps to establish best practices and develop a clear understanding of regulations and compliance issues. In a recent poll by Socialware—in which 60 percent of financial advisors claimed that social media had a positive impact on their businesses—the two biggest challenges facing advisors were confusion surrounding issues of best practices and compliance. When it comes to social media, financial professionals face additional regulation, but that is no reason to abandon social media altogether.