What if there were a button that, when pressed, would transport your desk into the middle of a crowd of millions of potential customers?
Or a button that would allow you to look through the office windows of thousands of other professionals in your industry or project your company's news onto a screen large enough for anyone in the world to see?
That may sound like science fiction, but the truth is, this button exists, and more than half of all financial professionals use it. That button is emblazoned with the words “create account,” and it is changing the way financial advisers do business.
For professionals who have yet to find that button or see the successes that it can bring, here are some of the basic reasons you should not only learn about but embrace the social-media phenomenon.
What: At their inception, social-media outlets such as Facebook, LinkedIn, Twitter and blogging seemed unnatural to many in the financial industry.
At first, they seemed to be tools that only young people of the “techie” generation could understand. Yet they quickly became a valuable asset to many industries, especially the financial services profession. The variety and combination of social-media venues have proved to be valuable assets to the business practices of financial advisers all over the world.
When: Now. Social media is no longer the future of business; it's the present. In a recent study by American Century Investments, more than 50% of all financial professionals considered themselves to have moderate or extensive experience with social media, and 35% more said they are on the verge of becoming involved. Social media is no longer a fad but a significant business tool in most successful companies.
A year ago, 73% of financial professionals had a business or personal social-media account. That increased to 86% in the most recent survey and is expected to continue to rise. Since 86% of these professionals have seen the light that social media can bring, it's becoming increasingly lonely for the 14% who are still in the dark.
Why: When it comes to financial advisers' using social media, it's becoming easier to see why and increasingly confusing to see why not. A survey by HubSpot showed that companies that utilize social media as part of their marketing strategy have seen success from their efforts. Of companies using LinkedIn, 57% have reported customer acquisitions directly from that channel. The same success rate applies for companies that publish blogs. A similar trend follows with other social-media outlets such as Facebook, which had a 48% customer acquisition rate, and Twitter, 42%. Other successes found from social media are less analytical in terms of content sharing and idea generation.
The brand awareness that these companies develop in their social-media accounts is priceless in and of itself, especially considering that the cost of these services is most often nothing more than a few minutes of time. At that price, it's more costly to abstain.
How: How have financial professionals integrated social media into their business practices? The answer to this is constantly changing and evolving as social-media venues change and evolve. The American Century survey showed that financial firms utilize social media to monitor industry and company news more often than any other activity. These media sites allow for constant updates on other firms, as well as the ability to keep track of movements, changes or breakthroughs in the industry as a whole. With instantaneous updates and various outlets for information sharing, the Internet provides the perfect view for users to follow along. Social media turns the average office chair into the best seat in the house, with the click of a button.
Who: The second-most-common way these companies use their social-media accounts is to research people. They log in to make connections, look up contacts or search for prospects. Just as more financial professionals are utilizing social media, more of the general population is, as well.
According to recent figures released from the Pew Research Center, 65% of adult Internet users in the U.S. participate in social networking. Between 2010 and 2011, the social-media utilization of Americans over 65 grew 150%, and the same statistic doubled among those 50 to 64.
The significance of the growth in popularity of social media by the public and financial advisers is that its value rises with the number of users because of the demand-side economies of scale that apply. The value of social media is not only dependent on how it is used but also on the volume of people who are using it. The more people who have an account, the more people in the network, which means more people to reach.
The social-media bandwagon is moving fast, but it's not too late to jump on. With the number of people using social media rising every day, the value for financial professionals' using such outlets is rising, as well.
So the magical “create account” button that opens up a realm of possibilities for the financial industry is out there. It is waiting for advisers to generate networking opportunities, share and receive valuable information, and expand their clientele. It is waiting for the click that sends its user into the world of social-media successes to come.
Have you pressed it yet?
Amy McIlwain is president of Financial Social Media, a consulting firm.