Wealth managers are in danger of “digital Darwinism” as clients’ acceptance of social media outpaces firms’ adoption of it due to compliance concerns, Abhay Rajaram, vice president of customer success at Hearsay Social, told diners at the PAM Annual Marketing Dinner last week. Another danger is that individual advisers within the firm have already accepted these channels.
In a straw poll on the evening, the vast majority of those attending said they have a corporate social media account and believed that social media has the benefit to grow the business. However, hardly any said they allowed individual advisers to have a social media presence.
“This is the balancing act – on the one hand there is a change of client expectations and a belief that these channels can drive business growth,” Mr Rajaram said. “On the other there are compliance concerns and the marketing department sits right in the middle of this.”
However, he warned that advisers are already on social media and are networking via it, but that firms are losing out on the chance to leverage this.
“The best performing advisers are not the best because of their social media activity but because of their personal relationships,” he said.
“Their communications over social media with these relationships should be embraced and leveraged by the firm to amplify its message. By doing so you can still promote a marketing approved message, but with a trusted personal touch and to a wider audience.”
In addition, you can also make sure you are protecting your brand and advisers ensuring that these communications are within the compliance boundaries. Otherwise the firm may be unaware of an individual’s social media output.
“It is not a question of if or when, it is now,” Mr Rajaram said. “It is here and the question is what to do about it.”
He warned diners of the dangers of “digital Darwinism,” this is the concept that “technology and society move faster than a business can adapt to it.” Mr Rajaram cited the examples of the effect of Netflix on Blockbusters, or Amazon did the traditional retail sector and Uber is doing to taxis. “Financial services, and wealth management in particular, are staring digital Darwinism in the eye,” he said.
Consumers now are likely to start research on any purchase via the internet, including those involving the wealth management sector. Mr Rajaram cited research that suggests that a consumer will already have been through 57 percent of their decision making process before making contact.
In addition, “gone are the days when the service provider is the expert.” Clients can thoroughly research an area online and will have information as to what they are after at their fingertips.
Mr Rajaram argued that what to do about this change in behaviour is to embrace it and seize it as an opportunity.
One example of one area that firm’s should be considering, is that people are “extremely open” on social media, even revealing times when they may be considering their finances or need should be discussing issues with their wealth manager. These include moving house, changing job and having a baby. A well connected adviser could recognise the opportunities of this, and a firm can present the individual with much more targeted communications based on their current circumstances.
“This should be an area where advisers, marketing and compliance unite and work together to harness these opportunities,” Mr Rajaram said.
This article was written by Tristan Blythe and originally published on thewealthnet.
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