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How to Lose Clients and Alienate People on Social Media

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An online connection does not equal a relationship, a report from the Northwestern Mutual Granum Center for Financial Security at The American College found. In fact, advisors who don’t use social media judiciously run the risk of alienating their clients.

 “Advisors are being bombarded with messages about social media,” Sharen King, executive director of the Granum Center for Financial Security, said in a statement. “There seems to be an unwritten expectation that as an advisor today, you need to be a savvy social media expert, but what we learned is that while clients are open to receiving information to help them learn more about financial products and services, they still prefer a face-to-face conversation to address their financial needs.”

The report is based on a pair of surveys conducted by Mathew Greenwald & Associates that polled consumers and financial professionals to identify trends and habits on social media. The consumer survey polled more than 1,000 adults ages 25 to 65 with income of at least $50,000 to get their feelings on advisors who use social media. Almost 300 financial advisors, including insurance agents and independent advisors, were asked about how they use social media and what they think their clients want.

The survey found that overall, just 11% of advisors have a comprehensive social media strategy in place.

Just over a third of respondents said they connected online with their advisor because he or she was already a good friend. Some consumers said they were turned off by financial professionals getting too personal online. More than 80% of consumers said they had a negative reaction to advisors sharing things like restaurant recommendations or favorite vacation spots.

Advisors need to understand what their clients want from them online. The survey found 13% of consumers said they connected with their advisor online simply because it made communication easier. The same percentage only connected because they were responding to the advisor’s request. More than a third said they would consider ending their relationship with their advisor if he or she tried to contact them through social media.

Advisors seem to already be aware that they need to tread carefully with their clients on social media. The advisor survey found 60% of advisors don’t use social media because their clients prefer traditional methods for communicating. The majority of consumers said they were cautious about how much financial information they reveal through social media (93%) and less than 12% of consumers said they were open to communicating through social media.

“The financial services business is about building relationships, one client at a time, via a private conversation,” the report said. “Social media is about building community, via group posting, in a public forum.”

Consumers are far more likely than advisors to use Facebook and Twitter. More than two-thirds of consumers use Facebook and 18% use Twitter, compared with 15% and 3% of advisors who use them. However, the surveys found consumers and advisors use LinkedIn at similar rates; 31% of consumers and 36% of advisors are on the site.

The Granum Center recommended that “at a minimum,” advisors should create a website and LinkedIn profile and get comfortable with both. Surprisingly, more than half of advisors said they don’t even have a professional website.

Younger clients were about three times as likely to connect with their advisors online as older clients, but both groups favored LinkedIn to do so. Almost half of consumers between 25 and 34 said they were connected with their advisor or agent through LinkedIn, compared with 17% of older consumers who agreed. Of the younger group, 36% said they were connected to their advisor through Facebook, and 35% said they used Twitter to connect. For the older group, 12% use Facebook and 11% use Twitter to connect with their advisor.

The report found that consumers just aren’t looking for advisors online they way they look for a handyman or a realtor. Of consumers who started working with an advisor based on a referral, just 1% were introduced online.

What they do want online, the report found, is information. More than 90% want tips on saving and investing on social media sites, and 57% specified LinkedIn as their preferred site for financial news. The report identified saving and investing tips, term and concept definitions and market commentary as the most valuable information to consumers.

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