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Old-Fashioned Networking—Online
Back to Articles of Interest
Author: Kenton Shirk
Marketing through social networking sites like Facebook, LinkedIn, Twitter, and MySpace has become a hot topic in the field of marketing. And it's a subject that's starting to get buzz in the financial planning field as well. The idea is that you can connect with clients, friends, and other contacts to gain access to their social networks—ultimately getting introductions to warm prospects.
Does it make sense for financial planners to include social media marketing in their marketing plan? To help answer this question, let's review the findings of Pew Internet and American Life Project's study1 of 2,253 adults:
- Social networking is—by far—more popular with young adults. Not surprisingly, the study found that "younger online adults are much more likely than their older counterparts to use social networks."
While 75 percent of adults ages 18 to 24 have a profile on a social networking site, the statistics are much less compelling for older adults. In comparison, only:
- 10 percent of Web users between 55 and 64 have a profile.
- 7 percent of Web users older than 65 have a profile.
Of course, the vast majority of advisors' ideal clients are older than 55.
- Social networking is quickly gaining popularity. On the other hand, the study also found that "the share of adult internet users who have a profile on an online social network site has more than quadrupled in the past four years—from 8 percent in 2005 to 35 percent now." As a testament to this, Facebook has an astounding 200 million active users!
And even though older adults haven't fully embraced social networking yet, they are heavy users of the Internet. Another Pew study2 found that individuals over age 45 make up 46 percent of the Internet-using population.
It's clear that social networking sites are gaining momentum, so it's certainly possible that they could play a larger role in advisor marketing at some point in the future. But before you start leveraging these services, there are four important questions to answer:
- Do you have enough spare time to be an innovator?
- Is this strategy effective considering your target audience?
- Are there other marketing activities that will have a higher impact on production?
- When it comes to Compliance, what are you permitted to do?
THE GOOD AND THE BAD
If you're contemplating social media marketing, here are a few considerations—both positive and negative:
- Relationship building: It goes without saying that these sites make it easy to stay in touch or reconnect with friends, family, former colleagues, and other contacts. This is certainly a benefit considering that, after all, our business is built on relationships.
- Referral research opportunities: If you befriend clients on a social networking site, you can research their networks before review meetings. This could give you advance insight about potential referral opportunities.
A few words of caution, though—some clients could be uncomfortable if they learn that you searched their personal profiles for business opportunities. It is best to be very cautious when using this information.
- Time killer: With instant access to everybody you love and care about, it's all too easy to get addicted to these sites—and it can become a huge drain on time. In this business, we all know the value of an advisor's time.
- Regulatory restrictions: A number of regulatory challenges are raised with social media marketing. Some potential issues stem from the ability to add ratings and recommendations, e-mails not being sent through hosted e-mail, inability to add required disclosures, and offering of instant messaging capabilities.
- Permanence and visibility: The information on these sites is public and often permanent—which could be risky. A disgruntled employee or an unhappy client could post something negative about you. Competitors could see clients on your list. Someone could copy your pictures, comments, and other information without your permission.
- Impact on brand: Social sites can be a great platform to feature your personal side. You can show off your family values, share personal passions, or highlight your latest philanthropic adventure.
At the same time, remember that sites like Facebook and MySpace are popular with younger crowds. Sometimes, profiles can be professionally inappropriate and even sexually explicit. If your goal is to brand yourself as a high-end advisor, listing your firm on certain sites could send the wrong message.
Another brand issue to consider is client perception if you are a heavy user of social networking sites and write daily posts. Will they assume that you're spending a large percentage of your day-to-day time on social activities?
LINKEDIN
Assuming you're targeting working professionals, LinkedIn may be one of the most useful sites for advisors because it offers:
- A professional image
- Access to 43 million members
- A user base of professionals who want to network
- Compliance's blessing
On the downside, LinkedIn looks less promising when considering a recent report3 published by Nielsen that measured the amount of time spent on various social networking sites. LinkedIn users spent a mere 202.4 million minutes on the site during the measured month—which pales in comparison with the 13.9 billion minutes on Facebook and 5 billion minutes on MySpace.
Finally, it's important to note that this article is written for this very moment in time. As social networking sites continue to evolve and gain popularity, marketing opportunities will adapt with them.
Source:
- Pew Internet & American Life Project, Adults and Social Networking Sites, January 2009
- Pew Internet & American Life Project, Generations Online in 2009, January 2009
- Nielsen Online, Time Spent on Facebook up 700 Percent, but MySpace.com Still Tops for Video, June 2009
Kenton Shirk is a practice management specialist. He is available at x9807 or at kshirk@commonwealth.com.
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