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Social media plays a large role in branding, developing thought leadership, building rapport and trust, and nurturing referrals, says Andrew Jenkins, principal at Volterra.Daniel Sambraus/iStockPhoto / Getty Images

For many financial advisors, social media was once seen mainly as a way to develop touchpoints with millennials. That’s no longer the case as social media has developed into an essential tool for business development and client service during the past five years that’s providing advisors with measurable results, recent research reveals.

For one, 92 per cent of advisors in the United States who use social media for their practices say it’s helped them find new clients; that’s up substantially from 49 per cent in 2013, according to Boston-based Putnam Investments LLC’s sixth annual Putnam Social Advisor Survey of 1,021 advisors in the U.S., which was conducted online this past November and December.

Furthermore, the research found that the median age of new clients attracted via social media is now 40 years old, up from 35 in last year’s study – a sure sign that more investors of all ages are using social media and that advisors can leverage these platforms to reach clients with potentially higher levels of investible assets.

In fact, advisors who are defined as “high achievers” in the survey – as a result of having grown their assets under management by at least 10 per cent from social media initiatives – are earning about three times as much as the average advisor from social media. Namely, they reported US$15.3-million in gains from social media compared with the average of US$4.9-million. (An advisor who is a social-media high achiever could be someone who learns how to use LinkedIn effectively, for example, and is active on social media platforms three times a day, the Putnam study says.)

“If you’re able to put out great content that speaks to people’s problems, that’s when people make purchasing decisions,” says Mike Yebio, program consultant at Snappy Kraken, a marketing agency for financial professionals in Toronto. “And that’s how advisors are able to attract clients.”

And if clients – both current and prospective – are spending a lot of time on Facebook, LinkedIn and Twitter, advisors who don’t have a presence on social media platforms need to ask themselves why they’re not positioning their businesses there, he says.

As it turns out, more and more clients are “open” to having their financial advisor “follow” them on one or more social media platforms, with younger demographics being the most receptive (89 per cent of millennials and 59 per cent of Generation Xers), according to a Broadridge Financial Solutions Inc. survey conducted in March of 502 individuals in the U.S. who work with an advisor.

Facebook is the most preferred social media network among investors for connecting with their advisors, the survey shows, as 61 per cent of millennials, 38 per cent of Gen Xers and 19 per cent of baby boomers say they’re amenable to their advisor connecting with them on that platform.

Galen Nuttall, financial security advisor at Freedom 55 Financial in Belleville, Ont., has experienced first hand the positive impact of connecting with current and prospective clients on Facebook. He manages two groups on the platform: one is a small, private group focused on goal-setting for people who have completed an introductory meeting with him; the other is a group of approximately 900 business owners with whom he shares content that deals with issues of relevance to entrepreneurs. Both have been good for business.

“[The first group] has been a really easy way to stay top of mind and the [participants] who don’t become clients right away often do after a period of time,” he says. “[The second group] has been valuable for me to understand their situation better and provide exclusive advice.”

Social media is changing advisor-client relationships because it allows for more informative discussions, whether that’s happening online or in person, says Donna Bristow, managing director, North American Wealth, at Broadridge in Toronto.

“The more information advisors can gain on their clients ahead of time will [result in] much better interactions and much better conversations,” she says.

Specifically, advisors can glean greater insight into their clients’ interests from social media and share information that they’ll find relevant later on. Alternatively, advisors can learn what type of information not to discuss with clients or prospective clients.

“If a client’s on Facebook publishing that they’re very focused on energy and the environment, you’re not going to start listing different sin stocks in an advisor-client conversation because you already know what their interests are,” Ms. Bristow says.

In addition to fostering more nuanced discussions, the use of social media plays a large role in branding, developing thought leadership, building rapport and trust, and nurturing referrals, says Andrew Jenkins, principal at Volterra, a firm that specializes in social media engagement, and former head of social media strategy at Royal Bank of Canada, in Toronto.

The reason more advisors aren’t on social media is because they assume their customers aren’t spending much time online or they’ve become complacent. Says Mr. Jenkins: “An issue for some wealth managers who are in their late 40s and early 50s is that they have a nice business going and think, ‘Why do I need social media?’”

But these advisors still need to build their books of business and it can become increasingly difficult to find new customers if they’re using old methods.

“We have to recognize that the world is changing,” he says, “[and] financial advisors need to change along with it.”

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