Enter “financial services” into the Linkedin search box and you will get more than a million results. Do the same with Twitter and you are likely to get a new “financial services” tweet every minute. Here’re three reasons why social media marketing is being used by financial professionals to engage clients and prospects:
Why Social Media Marketing
One – Online social networks is now mainstream with users spanning Gen Y (age 14-26) to Baby Boomers (44-62). According to Deloitte, the percentage of internet users who maintains a social networking profile jumped from 31% to 46% amongst Baby Boomers in 2009, and reached 77% amongst Gen Y. Baby Boomers holds about $10 billion of investible assets and Gen Y, with an annual income of $200 billion, is expected to inherit more than $18 billion. To reach out to these key demographics, financial professionals too are creating their online social network profiles.
Two – Investors are increasingly relying on social media for financial information. Almost two-thirds of high net worth investors say that peer-generated online content influenced their financial decisions in a 2008 survey conducted by Cogent Research. In a more recent 2010 study by Harris Interactive, almost half of investors surveyed use financial websites and blogs to get financial advice. And according to a Hotwire survey in August, 43 % bought financial services as result of recommendations from social networking friends. To be heard, financial professionals are blogging, twittering and engaging in online discussions.
Three – Online social network’s sharing mechanisms enables you to reach friends of friends. Client referrals are key to getting new business for financial professionals. A 2009 Schwab report shows that more than half of new clients for advisors came from client referrals. This is consistent with a 2005 study conducted by Tiburon. In a social media world built on sharing, an interesting post from you can receive a Facebook “Like” or a Twitter “Retweet”. This content sharing enables you to reach friends of friends. Online social networks, with its rich sharing mechanisms, present new opportunities for financial professionals to replicate their offline client prospecting online, and do so in a way that is scalable.