Social media is part of the financial services mainstream, Greenwich Associates asserts in a study released Thursday.
The study found that 97% of institutional investors use digital media professionally, and 79% currently use social media at work.
Nearly a third of these investors said information they obtained through social media sources had directly influenced an investment recommendation or decision.
Asset managers hoping to attract institutional assets must adopt an effective social media strategy, the study said.
Greenwich Associates interviewed 256 foundations and endowments, insurance companies and corporate and public pension funds around the world in November and December. Respondents’ assets ranged from $250 million to more than $10 billion.
The study found that information from social media had prompted about half of investors in the study to take specific actions, including the following:
- 48% did additional research on an industry issue or topic
- 37% shared that information with decision-makers at their companies
- 34% said the information had influenced them to work with a particular client or company
- 33% said the information had triggered a discussion with their investment consultant
“These results show that social media is influencing decisions that can result in the allocations of billions of investment dollars around the world,” the study’s author Dan Connell, head of market structure and technology at Greenwich Associates, said in a statement.
“With approximately 40% of the institutions globally expecting to increase their use of social media in the coming year, we’re projecting a further, rapid increase of social media influence in institutional investment markets.”
According to the study, LinkedIn enjoyed 52% penetration in the institutional investor segment, with 85% of those investors using the platform at least weekly. LinkedIn was also the most widely used platform of investors for work-related purposes.
Although institutions seeking opinions or commentary on market events cited the value of the Twitter news feed, they said LinkedIn feeds were better targeted, more closely reflecting their professional ties.
Facebook and YouTube were the most popular platforms for personal use, the study found, and they had also developed a following in the professional space for group discussion and video distribution.
Institutional investors in Asia were consistently higher users of all forms of social sources than their counterparts in North America and Europe, according to the study.
Greenwich Associates said asset managers and other investment firms seeking institutional allocations should look closely at their social media presence.
“Having an updated company page should be considered table stakes,” Connell said.
“Standout firms will go much further by acting as regular contributors of content and insight, creating a relationship with their potential clients and drawing them back to their site again and again.”
Greenwich Associates also said many benefits would accrue to firms that use key employees’ personal brands as part of their social media strategy, as social media is rooted in personal interactions.
It pointed out, however, that social-media savvy would not help an asset managers if the content they disseminated and their fund returns were below par.
— Check out What Facebook’s Future Holds for Advisors on ThinkAdvisor.