KFM Investment Group Believe Social Media Is Too Important for Wealth Managers to Ignore
While the financial services industry in general has embraced new financial technology, the majority of wealth managers have all but ignored it, unlike the KFM Investment Group who have been recommending Facebook to its clients since the IPO stage.
Toronto, Canada, August 10, 2015 (Newswire.com) - Here, disruptive new market entrants targeting the same finite base of lucrative investors mean wealth managers face unprecedented competitive pressures.
In particular, the inexorable rise of social media has driven sustained and irreversible change in the way customers stay informed, how they make decisions and how they interact with business. Clients now expect real-time responses from wealth managers, who must quickly adapt or face obsolescence.
Social media is already influencing investment decisions and market stability. For example, 2013, activist investor Carl Icahn tweeted his announced purchase of Apple stock. This simple social declaration went viral and reportedly pushed the stock’s value up by $17 billion within an hour.
In China, Alibaba waged a virtual ‘red envelope’ gift campaign to ring in the Chinese Lunar New Year, opening the virtual wallets of hundreds of millions of revelers (read ‘potential clients’) in the process.
Even ‘sentiment’ has become both measurable and meaningful (and therefore profitable).
In the US, a Boston hedge fund tracks consumer sentiment in social media to make investment decisions. And Fund Advisor, a digital wealth management service, employs an algorithm to analyze investors’ retirement and brokerage accounts and then makes recommendations based on their personal goals. It can then execute trades on clients’ behalf for a monthly fee.
So, what must wealth managers do?
First, they need to step outside their comfort zone and employ social media in ways that will probably run contrary to how they have traditionally interacted with clients and prospects.
While traditional wealth management firms have provided a high level of client services via strategists, analysts and managers, technology has expanded exponentially the choices for wealth management clients.
Digitally- savvy wealth advisors with good social media presence can position themselves as trustworthy and knowledgeable and help by pulling the right data, distill it for clients, map out effective insights and serve as a buffer against bad advice and unfounded rumors.
Second, they must overlook legitimate cynicism among industry professionals. The wealth managers of tomorrow must strive to overcome a misconception by senior wealth managers that social media is merely narcissistic or some kind of vanity play, and are, in fact, valuable tools to stay current with client needs and industry chatter.
Third, wealth managers should spend more time involved with social media day-to-day. Research, fact-checking and data sharing must move online, and traditional client outreach via phone or in person must – at the very least – be supplanted by social media interaction.
Of course, social media can create risks, not least reputational ones, as well as opportunities.
And, yes, regulators are already on the case – in the US, for example, the SEC is clarifying guidelines on advertising and communications via social media, as well as issuing specific guidance for investors on social media fraud.
But perhaps the biggest risk of all is for wealth managers to ignore social media itself.
After all, the prize is huge. Through social media, the industry has a once-in-a-lifetime opportunity to build stronger, more personal and bespoke client relationships.
Surely that has to be the Holy Grail for wealth managers?