Social Media for Financial Services

February 8, 2021
4 min read

We’ve all just learned a real-time lesson that social media has the potential to impact the market in ways the financial services industry previously thought improbable. When I initially set out to write about social media for financial services, I was anticipating that I would mostly cover all of the reasons we usually hear that social media is a landmine for many funds and institutions that is worth steering clear from and how to mitigate those challenges. However, as we’ve known for a long time but seen in action over the last month, social media can no longer be ignored in the industry and should be embraced rather than feared.

It is still true that social media for financial services can be a compliance headache. Unlike other industries, a fresh out of college marketing grad will not cut it to manage your channels. Similarly, your community and content management likely can’t be outsourced and will need to be overseen by compliance. That said, it has been our experience that compliance lawyers have become increasingly understanding of the nature of these platforms and can be seen as a resource rather than a barrier to building a community online. Not to mention, the industry has already come up with new and creative ways to include disclosure information in social bios and keep content previews short while driving to landing pages that contain full disclosures.

The other concern we hear most often is that social media does not reach the institutional investors, FA’s, and RIA’s that most asset managers, funds, and brokerages focus on reaching. And while it is true that social media is a broader platform that by the numbers skews more retail, 79% of Institutional Investors check social media while at work to keep their finger on the pulse of news and trends (source: Greenwich Associates, How Social Media Informs and Informs the Investing Process). So while you may not be spending your time engaging with these audiences on social media, it’s fair to assume that they’re watching where the engagement is.

Now, let’s turn our attention to the benefits and opportunities that social media can provide to financial institutions. An often overlooked component of social strategy is social listening. Investing in a social listening software can make the job easier. However, if a brand is just starting out, simply setting up feeds for hashtags and relevant terms can be an inexpensive way to accomplish the same goal. Along with allowing you to stay on top of and become a part of trending topics and relevant discussions, this also provides a valuable source of market research that can provide insights to inform strategy across the business. Financial services has been particularly slow to capitalize on social trends and generally shys away from frequent adaptations to their message. But consumers expect that brands to be a part of the zeitgeist and a robust social listening strategy can inform times when it makes sense to join the conversation.

It’s not only retail investors who expect and appreciate companies being a part of the conversation. In financial services, it can be especially valuable to those more elusive FA’s and RIA’s for the funds and companies that they’re recommending their clients invest in to have a strong presence online. Gone are the days when reading the prospectus was the main source of research a client would do on their investments after leaving their annual review with their advisor. Clients are following the companies they invest in on social media, they’re frequently checking the performance of their investments and they’re ever more educated and concerned about where their money is invested. Along with having a robust website, providing content on social media and having a strong presence and community there will help elevate the lift for FA’s and make your products easier to recommend to their clients. Charles Schwab, the back office for many FA’s, has done a great job on social media by consistently creating content for the retail audience that drives clients to their FA - a win-win for everyone. 

The wave of interest in ESG investing is a prime example of how all of these elements come together. ESG has become a part of the conversation around investing on social media and FA’s are being asked to incorporate ESG in their clients portfolios because of what their clients are hearing and reading about online. For those clients taking a more passive approach, they might not be outright requesting an ESG portfolio, but they’re paying attention to the companies they are investing in and monitoring their response to current events and the long-term changes companies are making to be more inclusive and sustainable. This trend was obvious to anyone with their ear to the ground on social media via social listening and now that it’s here, being a part of the conversation online is crucial if you want to be a part of the conversations that are happening in the advisors office.

I’m sure there will be a more robust conversation about investing in social media across marketing teams from the smallest to largest financial services companies in the wake of the last month. The opportunity is there and those who take it stand to benefit immensely. 

© 2024 Soubriet Byrne & Associates, Inc.