Can social media be useful for financial advisory business

Apr 13, 2017 / Dwaipayan Bose | 32 Downloaded |  9004 Viewed | | | 3.0 |  11 votes | Rate this Article
Financial Advisory article in Advisorkhoj - Can social media be useful for financial advisory business
Picture courtesy - PIXABAY

There are divergent views on this topic among financial advisors. A majority of financial advisors that I know think that social media has limited use in their businesses. However, I know some advisors have been very successful in leveraging the power of social media to expand their business. Social media is almost omnipresent in our daily lives. I see most people around me, including members of my own family, are hooked to Facebook, Whatsapp etc. Facebook keeps me updated on where my friends are vacationing, what movie they are seeing, where and with whom they are dining etc. The sheer amount of time people spend on social media indicates the influence these applications have in our daily lives. Yet when it comes to business, a lot of financial advisors are not able to extract the potential of social media to grow their business. The fault does not lie in the social media applications, but how it is used by different individuals.

Let us first understand what social media is. Social media are a collection of computer and mobile technologies that enable the user to share information with others via a virtual network. Please note that, I have bolded network because the network is the most important aspect of social media. Network refers to the group or groups of people you are connected with via the social media applications. These people can be your friends, relatives, colleagues, clients, associates etc. Social media is useful, only if you have a network.

Online social network takes time to build

You should know that, opening a social media account will not automatically build a network for you. You will build a network only by inviting people to join your network (e.g. through Facebook, LinkedIn etc) or if other people on social media invite you to join their network. I have seen some young independent financial advisors (IFAs) who have just started their practices, go on a social media overdrive to build a prospect book. This is often a fruitless exercise because the response rate (to invitations, friend request etc) in such cases is often very low leaving the advisors frustrated.

Let me share with our young advisor friends, my own experience with LinkedIn. In the first year after I opened my LinkedIn account, I was able to add only 50 contacts. All of these contacts were people I worked with as colleagues, business associates, clients, consultant etc. There are quite a few people who did not respond to my invitation. In the next 2 years, my contact network had grown to 300 and in about 6 years, since I opened my account, my network had grown to around 1,500. In the last 3 years my network grew automatically, with minimal effort on my part. The lesson for young advisors starting their practice is that, in the initial years of their practice they should rely less on social media and try to build their client book in the traditional way, through face to face meetings, client referrals etc. Once they build a critical mass of clients, then they will find social media to be far more effective in getting new prospects.

Using Social Media for sales

IFAs should realize that, social media is not the appropriate channel for selling products. SEBI is working on formulating guidelines concerning use of social media in capital markets. Further, social media is not suitable for delivery of products. Incorrect use of social media can damage the reputation of advisors and therefore they should be careful as to how to use social media.

Different financial advisors have different selling styles. Some advisors adopt a slightly direct and aggressive style to sales, while others try to build relationships at a personal level with their clients. Irrespective of what your selling style is, you should understand that, social media is platform for information (personal, professional or business) exchange. People use social media to get information that is either useful or entertaining. So IFAs should not use social media for self advertisement; instead use it to share information and ideas that people in their network will find interesting and beneficial.

What to post on social media

If you are on Facebook, you will notice that there are two types of users. Ones who regularly post pictures, videos, information, thoughts etc and the ones who “like” what others have posted. IFAs should make sure that, they are in the first category, if they want to be relevant. I have seen some IFAs using Facebook for recreational purposes only. However, for growing your business, you should make social media work for you and not the other way around. You need to post relevant, useful and insightful information on social media to get noticed.

But do not overload people with information. I have seen that a few people in my Facebook and Whatsapp network have comments for every single piece of news whether it is significant or insignificant; I appreciate their sentiments but many people find such social media habits quite irritating. As an IFA, you should put yourself in the shoes of the people in your network and post information or content that they may find interesting and useful.

So what should you post? Social media is a wonderful content sharing platform. While IFAs can share insightful content produced by others within your network, high quality content produced by IFAs themselves will be more beneficial to their brand. Producing high quality content can showcase the knowledge and intellect of the IFA to their network, which in turn can generate additional business.

Some IFAs write excellent blogs; blogs can expand the reach of the financial advisor outside their network. IFAs can use social media to socialize / popularize their blogs, by putting the blog links in their social media posts. People in the IFAs network can share the blog links with other people in their networks through “Share Now” feature in Facebook or “Retweet” in Twitter. When people share blog links on social media with others, it helps with Search Engine Optimization (SEO) of the blog content. SEO is a mechanism of putting a web content high on Google search results for topics related to that content. Sometimes a piece of content, through sharing on social media can become so popular that, it attracts a huge amount of footfall (visits) in a short period of time; in the social media such content is then said to be “viral”.

Video content is one of the more recent social media trends. Research shows that, video is more engaging than other content forms and is the best online “late assist” to final interaction with the customer to close a business. You can share video content through YouTube. If you (or your staff) are confident enough to appear on a video, all you need is a smartphone to record the video and post it on YouTube. You can also use a PowerPoint presentation with voiceover to create videos for YouTube. If you have a website and are using social media like Facebook, LinkedIn or Twitter to promote your content related to a particular business initiative, anecdotal evidence shows that, YouTube targeting can bring back people to your website for repeat visit. More repeat visits imply higher client conversion possibility.

When posting on social media you should be extremely cohesive and succinct in your messages.In Twitter you have only 140 characters to convey your message; while there is no word limit in Facebook or LinkedIn, brevity is a virtue in all social media communication. IFAs can share information, insights, promote investment awareness campaigns etc using social media. Appropriate use of social media can certainly improve the personal brand equity of the IFA. Personal brand equity is the biggest asset in the financial advisory business and based on my experience, highly successful financial advisors invest a lot in terms of time, effort and sometimes money, on their personal brand equity.

Using different social media channels

IFAs can use multiple social media applications like Facebook, Twitter, LinkedIn etc. but they should identify the most effective social media channel for their business, because each of these channels have different characteristics. If you do not have a website or have a website which is fairly new, Facebook is your online brand identity when people Google you. So you should devote time and effort in building your Facebook profile, without making it look like a sales pitch for your practice. Facebook is a wonderful medium for exchanging ideas, thoughts, questions and answers.Facebook is one of the most powerful content sharing media. But Facebook is most effective for business when used as a two way channel for communication. One way to gauge the effectivenessof your Facebook initiatives is to see the amount of conversations you are generating on Facebook.

Some IFAs follow someone on Twitter in the hope that they will follow them back; unfortunately, it does not work like that most of the times. You should understand the difference between Twitter and Facebook. Facebook works on the “friendship” principle while Twitter works on the “followership” principle. Just because you follow somebody it does not imply that he or she will follow you back. People will follow you only if they see any benefit in following you.

Some of your clients may not even be on Twitter. Following others may get you some encouraging results initially as some of them may follow you back, but this strategy will not work in the long term. In the long run it will be your Twitter activity, which will get you followers. You should post regularly on Twitter but avoid asking your followers to re-tweet your posts. Twitter can be a great mechanism to expand your network but you have to be patient in the initial stages of your Twitter journey. As a Twitter user, you should also listen to Twitter conversations carefully, because it may reveal useful insights on customer issues, future industry trends, regulatory trends etc.

LinkedIn can also be a very powerful social networking application for IFAs. Your LinkedIn profile is your online curriculum vitae (bio-data) and therefore, you should spend some time on creating your LinkedIn profile. I had shared with you earlier that, it takes time to build a strong LinkedIn network. The size of your LinkedIn network is not as important as the quality (in terms of relevance to your business) of your network. Once you setup your profile, LinkedIn will prompt you transfer your email contacts to LinkedIn. The key to business success in social networking is to expand your network beyond your immediate network of clients and business associates. LinkedIn lets you view second connections. In other words you can view the connections of people, who are connected to you.

Carefully study the network of your clients and see who you want to connect with in your client’s network. These will be prospective leads and clients for you. At the beginning you will have to proactively send invitations to grow your network. When you invite someone to connect with you on LinkedIn, it is good idea to send a personalized invitation that states why you want to connect with you, instead of sending the default LinkedIn invite. For example, you can mention a common connection or complement the person or any other reason. But do not make your LinkedIn invite a sales pitch. This may put off people, unless they are desperate to use a service that you offer. Use LinkedIn’s “people you may know” tool, to identify potential new connections.

On LinkedIn you should join relevant discussion groups because it is a great away to connect with new prospects and build your brand identity. The "Faceted Search" function on LinkedIn allows financial advisors to target your searches for prospects based on seven different facets: current company, past company, location, relationship, industry, University and language. This LinkedIn feature can help you sharper customer targeting.


Social media can be a powerful marketing tool for IFAs provided they know how to leverage the maximum potential of these platforms. Social media can help advisors build stronger engagement with their clients, build personal brand, expand their network and also help in acquiring new clients. However, as discussed in this article, this will require time, effort and a well thought social media strategy. Technological developments have opened up multiple avenues for IFAs to expand their business. IFAs should take full advantage of technology but they should remember that, technology is just an enabler. Insofar as India is concerned, face to face meeting is and, in the foreseeable future, will still be the best mechanism of closing a business transaction in financial advisory.

Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

comments powered by Disqus
BOI MF Balanced Advantage Fund 300x250
Nippon India Edge Of Knowledge April 2024 300x250
Bandhan MF Innovation Fund NFO 300x250
SBI MF Multi Asset Allocation Funds 300x250
UTI MF Buddy App February 2024 300x600