Social Media Usage by Advisors ‘Critical’ for Gaining New Clients, Survey Finds

New survey results suggest a clear success rate by advisors who use social media for marketing, building relationships and obtaining new clients, compared to those who don’t use any platforms.

The fifth edition of Putnam Investments’ Social Advisor Study found that 86% of those using social media for business reported that it helped them gain new clients, up from 80% in 2016 and 49% in 2013, the first year the study was conducted.

Conducted online in November 2017 in conjunction with NMG Consulting, the survey included participation by 1,014 U.S. financial advisors who have advised retail clients for more than two years, including a mix of newer and more established advisors who work across a range of intermediary channels, including independent and regional broker-dealers, nationwide planning firms, wirehouses, insurance firms and RIAs.

The vast majority of those who gained new clients (88%) report that their use of social media has changed the nature of their client relationships a “great deal,” including how they communicate, conduct business, approach prospects and convert leads, while also reducing the amount of face-to-face time previously required to manage their business.

According to 60% of respondents who gained clients, social media use has significantly improved their efficiency compared with traditional networking. (That’s up from 56% in 2016.) In addition, 83% say that social media has helped shorten the time generally required to convert a prospect into a client.

Advisors in the survey also say that social media has changed their client relationships in a number of other ways:

  • 67% find it is easier to share information with clients;
  • nearly 60% say they have more frequent communication with clients, although 38% say they connect less frequently by phone or in person;
  • 54% say they have a better professional relationship with clients, while 47% report a better personal relationship; and
  • 50% report decision making is faster and easier.

Mark McKenna, Head of Global Marketing at Putnam, emphasizes that the benchmark for successful use of social media as a business tool has clearly gone up in recent years. “It is imperative for advisors to employ a highly active, evolving strategy when it comes to utilizing social media in various aspects of their business,” he explains. “There is a tremendous, ongoing opportunity for financial intermediaries to build and strengthen long-term relationships with clients through this critically important communications channel.”

Driving Business

The report emphasizes that even though estimates of business gained directly from using social media have leveled off, it is helpful to compare the social profiles of advisors based on tenure, gender and AUM.

According to the study, just 28 of the 1,014 advisors polled reported no business or personal use of social media, signaling that some usage is nearly universal. The average advisor who is not using social media is 60 years old, with 24 years of industry experience and $69 million in AUM, the survey found. By comparison, advisors using social media for their business have an average of $20 million more in AUM, coming in at $89 million, while advisors who use the medium only for personal use have $85 million in AUM on average.

As for the average amount of assets directly gained via social media, advisors attribute slightly less than $5 million. That’s virtually unchanged since 2014, but represents an increase from $2.7 million in 2013.

Platforms of Choice

LinkedIn appears to be the network of choice, with 73% of advisors reporting that they use the platform for their business, compared with 56% who use Facebook and 46% who use Twitter. But even though LinkedIn continues to be the leading business site, advisors report they use Facebook an average of 22 times per month, versus only 16 for LinkedIn.

McKenna notes that LinkedIn remains a critical tool, but Putnam has found that over the past five years the platform’s share of net business use among advisors has flattened, while other networks are growing. According to the findings, 42% of advisors say they use Yelp, 39% use YouTube and 34% use Instagram for business.

Meanwhile, advisors who say they have not gained clients via social media continue to report significantly less “strategic use” of the tools available to them. Based on the 2017 findings, these advisors appear to not be as actively engaged, especially with respect to creating sponsored ads, using paid promotion to boost content views and posting original content. The report notes that “simply liking and sharing content appear to be less helpful in gaining clients.”

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