A recent article on RIABiz titled “Early adopters of social media, RIAs are growing disenchanted with its power to drum up new business” summarized the findings of a 2011 study of financial advisors’ use of social media. The analyst who authored the study,
interviewed me for my thoughts on his findings a couple of months back and I shared with him much of what you will see below. The title of the study states that “The Bloom is Off the Rose” meaning that advisors are discovering that there is not as much value as proponents of social media claim. While that title is provocative the subtitle “Most Have Unrealistic Expectations Or Fail To Use It Correctly“ gets to the root of the challenge.
Here is my take on how advisors and financial firms should interpret the results of the survey.
My first question to the author was, “are these the same advisors?”
The advisor sample used in 2011 is similar but not the same as that used in 2009. The headline in the RIABiz article seems to indicate that the advisors who were originally surveyed back in 2009 are the same advisors responding to the 2011 survey. This is not the case. It is actually a different random sample of advisors using social media who are reporting a lower level of success than those advisors surveyed two years earlier.
Statistically this is an acceptable practice. Random samples are supposed to guard against selection bias. This is how marketers and political pollsters run their surveys. However, in this case I think it may lead many readers to come to a false conclusion that there is less value to be had for financial advisors on social media now compared to what existed back in 2009.
What I would really like to see is a second survey of the original participants that compares their sentiments in 2009 with the those of 2011. I suspect we might see a different picture emerge than what the 2011 survey respondents reported. Why? Well, I know two years doesn’t sound like a long time but when it comes to social media, it’s a lifetime.
The social media landscape in 2009 was vastly different than the environment in 2011
Below are a few simple facts about the environment in which financial professionals were operating in 2009 compared to those surveyed in 2011.
- The advisors surveyed in 2009 were likely, as a population, much earlier adopters of social media than those surveyed in 2011.
- The population of people and financial advisors on social networks was much smaller in 2009 than in 2011. To put it into perspective, Facebook had 25o million users back in July of 2009 compared to approximately 900 million at the end of 2011. Twitter is said to have over 200 million users/accounts but over 100 million of those accounts were added in 2010.
- The volume of posts from individuals and brands was much smaller in 2009 than it was in 2011.
Social media in 2011 was vastly different for financial professionals than it was in 2009. This is important to understand.
Why is the difference in the social media landscape between time periods important?
The logical assumption is that it must have been easier for advisors back in 2009. Since social networks and the concept of an interactive web were so nascent by comparison, advisors who were first on the scene found the streams of Facebook, Twitter and LinkedIn paved with gold. The simple act of being on social was enough to make the skies open up and rain assets under management.
As funny as that image is, it actually was a different world back then. As someone who has been using social media since 2004 I can attest that it was much easier to gain access to influencers before their follower counts exploded into the millions and it was much less noisy in peoples streams before every brand in creation started interacting with us all. But, I can also tell you from personal experience that the early (bleeding edge early) adopters back in 2009 and before saw something the rest of the world didn’t yet grasp.
The early adopters saw opportunity before anyone else. We saw that social media was where the world was headed and we got to work. We joined Twitter before Oprah and Ashton Kutcher put it into the collective consciousness. We were the ones inviting our professional networks to try this new thing called LinkedIn and convincing our friends and family that Facebook really had value. So in many ways is was significantly harder to find success on social media back then mainly because the tools were not as widely adopted by the general population.
Convincing people to join a social network is substantially more labor intensive than asking them to connect with you once they are actively using the network.
The opportunity for financial professionals using social media is still great for those who are willing to put in the effort and use best practices.
Success in any business endeavor requires work. It takes effort to build a network and it takes a consistent amount of interaction with that network to build the trust and familiarity necessary to drive business results. I suspect, based on what I commonly see, that many of the advisors surveyed have not yet put the effort into social media that the original population had when it was surveyed.
This suspicion was echoed by the study’s author as well when we talked. His take was that many advisors are sort of poking at social media by publishing links to their blog posts and market commentary but not going much further to build rich interactions with their networks.
This is not to say that the 2011 advisors were lazy. Far from it. They took the initiative to explore new tools and channels for marketing and client service. These advisors, like the 2009 participants, want to grow their business and serve their clients in a manner that suits their needs. However, the bleeding edge advisors I mentioned above were the innovators and pioneered the new space. The next wave likely jumped on to social media without the full conviction necessary to build a robust network and the marketing savvy (as Ron say in his subtitle) to take advantage of the network they did build.
This phenomenon is common. The innovators come first. These people are driven by a fire within to blaze a new trail. Tales of the innovators’ success is told far and wide. Excitement spreads among those itching for an edge and the second wave begins its pursuit of success. In this next wave some succeed and some come up short. Tales of disillusionment and risk begin to bubble up and people wonder if the tales of success were but a fantasy. But then, as the dust clears people begin to see it clearly…the innovators were right. Their vision of the future was true and now a system of success begins to be developed and honed.
A dramatic rendition to be sure but this is exactly what we saw with the gold rush, the industrial revolution, the internet boom, e-commerce and with social media usage in unregulated industries. The brute force, over the top efforts of the early adopters eventually lead to repeatable patterns that others can use to achieve their own success. Systems like the Social Business Activity Cycle are very prescriptive and a direct result of those early efforts.
In my next post I will share a very numbers focused pattern for success. I’ll start with a simple question “How many clients, prospects and referral partners are you connected to via social networks?”