Key Social Media Trends Affecting the Wealth Management Industry

In 2011, 65% of adults used social networking sites, a dramatic increase from 29% just 5 years earlier. Additionally, 50% of adults actively used social media last year.*  Growth is expected to increase in 2012, as Twitter adds 500,000 users per day on a worldwide basis.* Online discussions related to full service investors is heavily focused on advisors/brokers.  Consumers discussing full service investor experiences online often reference “financial advisors,” “investments,” and “wealth management,” as illustrated in the following word cloud:*

Research conducted by our Consumer Insights and Strategy (CIS) Department, which provides social media analysis and reporting to understand consumer attitudes and behaviors relative to brands, products, services, and current topics, identifies the following key trends affecting the wealth management industry among full service investment firms. All of the following comments from online consumers were gathered by the CIS Department.

1.  Trust is the most frequent theme in consumers’ online discussions.

Consumers often state that they trust their current advisor/broker. However, a lack of trust prompts many of them to look for a new advisor. New investors also ask advice from their peers when seeking a trustworthy advisor. Some financial advisors are viewed as promoting their own agenda, rather than looking out for their client’s best interests.

2.  Social media has increased the transparency of advisor plans and service levels.

Investors typically share the advice they receive with others to seek validation for their financial plan. Investors also seek feedback from others as a second opinion.

3.  Investors are increasingly sensitive to fees and costs.

Similar to investment advice, social media is a means to learn and compare what other investors may be receiving. There is a sense of community, as many share tips with new investors, such as ways to reduce unnecessary costs.

Social media clearly gives investors a means by which they can engage with peers. This virtual community also allows investors to compare strategies they’ve developed with their financial advisor and provides novices with a platform with which to comparison shop. Online discussions take place not only in investment forums (such as Morningstar.com and Advisorone.com), but also on general social media sites such as Twitter and Facebook. The nature of engagement is consistent across these different sites, as investors seek and share experiences wherever their trusted peer group is, even when it is not an investment-specific platform.

Sinces Social media has changed the way consumers obtain information and evaluate products and services, investment firms cannot dismiss its influence. Firms will need to continue to adapt to increasingly educated and wired investors. Because there is a seemingly endless amount of data now available to investors, full service investment firms will win new investors by establishing and leveraging trusted relationships. Today’s investors are increasingly fickle when selecting, as well as remaining with, an investment firm due to increased exposure to peer reviews. Because of this unprecedented level of transparency, investment firms’ ability to differentiate themselves on best practices becomes even more important, as good experiences—as well as bad—can be shared virtually within seconds.

To Learn more about the 2012 U.S. Fill Service Investor Satisfaction Study, please Contact Holly Zagresky at Holly_Zagresky@jdpa.com
The above information was published in our 2012 U.S. Full Service Investor Satisfaction Study.  The study is based on responses from more than 4,400 investors who make some or all of their investment decisions with an investment advisor. The study was fielded in February 2012.
Full service investor social media research includes information gathered online from May 2011 through April 2012, which consisted of more than 5,000 online communications across various social media.
*“65% of online adults use social networking sites.” Madden, M. and Zickuhr, K. Pew Research Center. Aug. 26, 2011.
*eMarketer, March 2012.
*A word cloud is a visual representation for text data, typically used to depict metadata on websites or to visualize free-form text; data is generally shown as single words and the importance of each tag is differentiated with font size or color.
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