Why Wealth Managers Should Blog
Traditional wealth managers have been largely insulated from the disruptive forces of social media because their best, most affluent clients are older and have been slow to adopt new technologies. However, as society grows increasingly digitized, so must wealth management as supported by the following from Forrester Research:
- Today’s investors are voracious consumers of financial information — from Money Magazine to online calculators — that helps them make smarter financial decisions. More than 90% of households with more than $1 million in investable assets are now online.
- When affluent investors are segmented by how self-directed they are:
- 50% emerge as Validators — investors who want to gather their own information and make their own decisions but also actively seek the counsel of advisors.
- 25% of the affluent are Delegators — investors who prefer to turn their finances over to an expert to manage.
- Social media use among internet users aged 65 and older grew 100% between 2009 and 2010.
- In 2010, 26% of internet users 65+ logged into Facebook, Twitter, etc.
- Social media use among internet users aged 50-64 grew 88% between 2009 and 2010.
- In 2010, 47% of internet users 50-64 logged into Facebook, Twitter, etc.
- With every significant digital technology trend, Gen Yers have led the adoption curve, with Gen Xers, Boomers and Seniors not far behind:
- Gen Yers have been spending more time online than with traditional TV for several years
- Gen Xers have recently started to spend more time online that with traditional TV
- Younger Boomers now spend an equal amount of time with both media
- Over time, Older Boomers and even Seniors are likely to follow suit
- For Gen Yers and many Gen Xers, digital is the norm. If history is any guide, they will accumulate assets as they grow older — and the digital behaviors that these consumers are developing now will stay with them as they age.
Although many wealth managers feel uneasy about social media for a variety of reasons, regulation and security being two big ones, it can actually be good for business. Unlike the traditional way of single-point communications done person-to-person via telephone, paper and word of mouth, the internet enables robust person-to-person networks that are instantaneous, massively interconnected and unparalleled in their reach. With 71% of U.S. online adults reading blogs and actively connected to social networks like Facebook, LinkedIn and Twitter, this is a great opportunity to connect to prospects and existing clients. Still, taking advantage of this opportunity is indeed tricky as social media regulation is one enormous gray area. The bad news is that only one financial regulator has issued detailed guidance on social media thus far; FINRA and not the SEC. The good news; however, is that FINRA has a reputation for strictness. For this reason, many financial services firms are beginning to base their social media compliance decisions on the fairly recent FINRA Regulatory Notice 10-06 from January 2010.