Capco Blog

Social Media is not the panacea for Wealth Managers

Social media is not a “one size fits all” communication channel for wealth management. Financial advisors and the institutions that serve them have to stop trying to shoehorn social media into an advice delivery distribution channel. They have to start thinking about it as a parallel reality they need to reside in, to be seen in, and yes, to socialize in.

Wealth clients do not/will not want to consume tailored advice over a social media. They do not/ will not want to discuss the details of their deeply personal financial lives over this somewhat impersonal forum. They still require direct person to person communication when it comes discussing the most intimate details of their financial lives.

Sure, social media is an extremely effective communication tool for many things and the uses are expanding rapidly. It can connect people in ways never imagined just 5 years ago. Information can be blasted out to millions of people within a split second. But as we know not all clients are the same, we also know that not all information is the same.

At Capco we conducted a survey of advisors with several industry leading financial institutions and small RIA’s. They said one of two things: either their clients aren’t using social media, so they don’t or they use it in their personal lives, but not in their professional lives. No matter how effective it is as a short form communication medium, it’s still an impersonal means of communication, full stop. Social media is a lot of things, but it’s not an effective means to deliver tailored financial advice.

That’s not to say that advisors shouldn’t get onto it and start living in it. They have to. While meaningful advice delivery won’t take place there, it’s an incredibly powerful way to compliment your advice delivery capabilities with true socialization with clients. And yes, expanding your personal brand by delivering information to the masses via these forums is a good thing, and yes, you can see what people think about you too.


Your research indicates social media ISN'T being used in the category..... so who's saying it's a panacea if your research says firms aren't doing it? Wouldn't it be a fair assumption that they already know that? Where's the insight here?

The point I am trying to make here is that many wealth managers do not understand how social media should be used. Wealth managers shouldn’t think about it as a replacement of the all-important person to person communication. They should think of it as a supplement.

Moreover, wealth managers need to have their own personal social media strategies. If there’s one thing we know about social media is that it’s deeply individualized. Large institutions, while they need to develop broad governance policies, should be assisting their advisors in developing their own strategies with their clients.

Social Media is 80% give and 20% take. So in Wealth Management, social media can be used to educate current and future clients with helpful tips and other useful material. This again will need an expert wealth manager putting the tips, answering any generic questions with a marketer who ensures the message which goes out. With content rich social media pages, engaged users and cutting-edge research, good social media pages deepen the client involvement and attracts new clients.

I agree on your definition of the 80/20 rule only if you’re trying to illustrate that significant effort needs to be expended in order to see results. However, I don’t agree with your statement, if you intend to minimize the return of a successful social media strategy. I think a solid social media strategy can yield terrific results for advisors both in acquisition and retention. And these are not cookie cutter strategies. They need to be tailored, in both frequency and in quality, to the advisor as well as to each individual client.

My original point was that direct advice can’t be delivered through a social media tool. What I didn’t explicitly state is that all of the ancillary areas where you can interact with your client are multiplying rapidly. The areas you mentioned above are solely around a client’s financial life, but advisors should think about the totality of a client’s life and how you may deepen your relationship and really get a good understanding of your client’s motivations and needs. Such areas include hobbies, affinity groups, clubs, religion (I know, sensitive topic, but one worth exploring) politics (another sensitive one) and the list goes on and on.

Did your survey talk about the use of Social Media as an effective Marketing Tool. While I agree that it cannot be used as a means to dispense any kind of advice, personalized or otherwise one can definitely argue that as a marketing channel it is pretty effective. Today I don't even visit a restaurant without first reading its reviews on yelp. Are advisors actively courting "likes" on their facebook pages that would help influence their potential customers. Is that even compliant as per FINRA or SEC? I am trying to dig a little deeper on these aspects and would certainly appreciate your views.

There are also issues around the clients' perceptions of confidentiality and also of client focus. Advisers using social media will have to be careful they do not convey the impression they are too "chatty", which may lead some clients and potential clients to worry that their own personal information is only separated from the social media space by a thin wall. In addition, many clients like to feel that the adviser only thinks about them (and no-one else!) An adviser portraying themselves as always having one eye on their tablet or phone may lead clients to wonder if they are getting the adviser's full attention.

Very good article.
Thanks for your opinion.

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