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Social Media Is Catalyst for Investment Changes Among Affluent: Cogent

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Nearly 70% of affluent investors who use social media specifically for financial and investing information have reallocated investments or have started or changed their relationship with investment providers based on content they’ve received through those channels, a report from Cogent Research found. Even so, most investors rely on multiple sources for information, the report, released Feb. 22, noted.

The report found 34% of affluent investors use Facebook, Twitter, LinkedIn, YouTube and blogs for information on personal finance and investing.

Investors who use social media for financial and investing reasons are using it to form first impressions about firms and to guide their decisions about whether to use the firm’s products, according to Cogent.

Remy Morrison, project director for Cogent and a co-author of the report, told AdvisorOne on Monday that in addition to using social media for help choosing particular investments or companies, investors are using it to examine a wide range of topics, including market conditions, retirement planning and investment performance.

They also use Facebook and Twitter to double check what their advisors are telling them, he added.

“Investors have become more involved and more engaged when talking to FAs,” Tony Ferreira, managing director for Cogent and co-author of the report, told AdvisorOne. “In those conversations, they’re more in tuned, and hopefully that makes those conversations easier for advisors.”

Morrison added that 36% of respondents in an earlier survey said they were relying more on their advisors as a result of what they’ve learned online. The 2012 Advisor Touchpoints survey found 39% of advisors were staying engaged with their clients through social media, Morrison said. Over a quarter were using it to solicit prospects.

Cogent noted that from a public relations standpoint, social media can be a “double-edged sword” for companies when investors use those channels to complain. When dealing with that kind of feedback, Morrison encouraged advisors to be “judicious and patient. You have to act quickly, but with understanding.”

Consumers tend to react most positively when companies respond to negative feedback with genuine concern, a brief suggestion for a solution, and a contact for someone who can help them more completely, Morrison said. However, he stressed that negative feedback has to be dealt with on a case-by-case basis. “You have to monitor it to know which voice to use,” he said. “It may differ by audience and by platform.”

Cogent identified the top 10 brands that have done a good job balancing their negative and positive impressions on social media channels including Facebook, YouTube, LinkedIn and Twitter.

  1. Fidelity Investments
  2. ING
  3. Vanguard
  4. USAA
  5. Charles Schwab
  6. John Hancock
  7. American Funds
  8. Wells Fargo
  9. T. Rowe Price
  10. Janus

One way that Fidelity has been able to stand out is because “they’re engaged across multiple platforms,” Ferreira said.