Michael Kitces has more than quadrupled his annual income over the past four years — a development the financial adviser attributes largely to his use of Twitter.
Mr Kitces is a partner at Pinnacle Advisory Group which is based in Columbia, Maryland, and he spends a few minutes several times a day scanning the social media platform for news, composing tweets and responding to messages.
He has built a follower base of more than 28,000. Many of these users keep tabs on his account for links to financial articles and some have turned into clients.
“I actually spend less time with clients than I used to, because it’s growing business so much that I can delegate clients to other advisers in our firm,” says Mr Kitces, whose business now oversees about $1.8bn in assets. He says it would be hard to imagine a better way of building an advisory business.
Mr Kitces is far from alone in using social media to win over clients. A survey of more than 800 financial advisers in 2015 by Putnam Investments found that 81 per cent of those questioned used social media for business, up from 75 per cent in 2014. Among those who used social media for business last year, 79 per cent reported gaining new clients through the medium, compared with 66 per cent in 2014. Over half of those surveyed said they had gained over $1m in client assets under management.
But simply maintaining an active presence on social media is not enough. Mr Kitces, for example, dedicates much more time to producing commentary for his blog, Nerd’s Eye View.
He says relying on tweets alone to increase your customer base will not work. “If that is your social media strategy, you are almost certainly going to fail,” he says. “A well-designed website with high quality content is what actually converts people into clients.”
Mark McKenna, Putnam’s head of global marketing, says Twitter is more commonly employed to establish an adviser’s brand image, whereas LinkedIn is used for immediate networking.
LinkedIn has its own prospecting function, Sales Navigator, which allows advisers to search for potential clients, adds Mr McKenna.
According to Putnam’s survey, 70 per cent of advisers use LinkedIn, 47 per cent are active on Facebook and 42 per cent have Twitter accounts. Of those who generated new business through social media, 88 per cent reported having done so via LinkedIn, 68 per cent through Facebook and 64 per cent by way of Twitter.
Advisers who use social media successfully tend to balance the financial information they post with more personal information, Mr McKenna says.
Mr Kitces agrees. “There has to be some mixture,” he says. “People don’t want to connect with an article-tweeting robotic automaton — people want to connect with other human beings. Your personality has to show through at some point.”
Making an online connection with investors seems to be ever more important. A survey of investors conducted in December by the Financial Planning Association and LinkedIn found that over half of respondents aged between 18 and 44 perform an online search for an adviser before making contact with them. Also, 10 per cent did online searches of the adviser’s social profiles after meeting them but before deciding whether or not to hire them.
More than two-fifths of potential clients in this age bracket, which is highly skewed towards use of social media, said that an adviser’s online profile was “important” or “critical” to their decision-making process.
This trend is leading advisers to share content, such as papers they have authored, more freely, says Julie Littlechild, founder of consulting firm Absolute Engagement.
“The pay-off is probably largely through supporting referral efforts and creating credibility,” Ms Littlechild says. “It’s a slow-growing trend. It’s something that’s completely different in terms of a strategy.”
Mr Kitces says many advisers flounder because they give up before allowing enough time to build up a strong base of online connections or followers. It can take years to amass thousands of followers, he says. But when those high numbers are achieved, the effect on an adviser’s reach can be profound.
“It takes me the same amount of time and effort to make an article and send a tweet for 30,000 followers as it [once] did for 300,” he says. “Your time investment is the same, but the returns get better and better, the longer you do it.”