Social Media is an unstoppable trend – we live it daily while catching up with friends on Facebook, job-hunting on LinkedIn, or sharing our passions on Twitter. Research has found it is also a proven tool for companies to achieve strategic goals, including higher profitability and valuations. Yet, SM adoption by asset managers is rather low compared to other industries. For a business where brand awareness, networking and client communications are key sources of competitive advantage, the reluctance to embrace social is a problem.

SM laggards are bound to lose market share against the backdrop of customers’ dynamically changing demographic profiles and attitudes. As part of the University of Cambridge Executive MBA program I have recently conducted a study on the level of SM adoption, engagement and challenges faced by investment managers in Europe and USA. Comparing the top 100 firms on both sides of the Atlantic indicates that the most widely used channel is LinkedIn due to its professional networking focus. Yet, just 11% of Europeans and 15% of US firms take advantage of its interactive nature. Most still use it simply to post static information and as a recruiting tool.  

European asset managers have discovered Facebook too, but their presence is still far from active, with the majority showing zero engagement with the audience. In USA the penetration is much higher:  80% of the asset managers have a Facebook page, with 29% of those actively engaging with their community, 22% engaging moderately, and 49% not at all. Surprisingly, the penetration of Google+ is higher among European compared to US asset managers (46% vs.32%), yet most have signed up to book a seat at the table without actually engaging with stakeholders. Just half of the leading asset managers – both in Europe and USA – have a corporate Twitter channel, but those who do, make good use of it. As many as 62% of the European and 66% of US companies frequently share a variety of content, engaging in conversations and responding to enquiries. Nonetheless, the number of followers is far from enough given the customer base of these firms. Although asset managers are opening up to video content, roughly half of all have signed up for YouTube. Of those that have accounts, Americans use it much more actively (45% vs. 19%). Even the channels with rich content and frequent updates, however, atract few subscribers: I was “privileged” to be the first subscriber of several year-old YouTube outlets. Interestingly, just 15% of European and 23% of US firms have blogs – some appearing abandoned – which tells me there is a drift away from this outlet to the more popular social networks. My research was hampered by the fact that very few firms (23% in Europe and 34% in US) have bothered to place visible SM buttons on their websites – an indicator showing who cares about social. There appears to be a positive correlation between asset managers’ size and SM activity as well as digital influence – larger firms are more active and more influential as measured by their klout score. While some asset managers report gaining new clients and realizing savings via SM, my survey showed that firms use SM predominantly as a communications tool, aiming to boost reputation and brand equity (61.4% of responses), become more open and human in the eyes of the customer (54.5%), and communicate more effectively with clients and advisors (50%). In terms of content, community managers share mostly corporate news, thought leadership messages, administer games and quizzes to expand the SM followers base,  as well as video content to highlight the investment team’s expertise, investment process and strategy. Why does “smart money” shy away from social? The main barriers are related to regulatory compliance concerns (37.1% of responses), difficulties in measuring the benefits (28.6%), and fears of negative publicity (25.7%). It is not about the money – less than 3% point out “lack of financial resources” as an obstacle. The big surprise was that a third of the companies do encourage employees to use SM at work — some firms seem to realize that its people can act as powerful evangelists for the brand online. I believe that the benefits stemming from SM massively outweigh the risks involved, so asset managers must clear the barriers and embrace it. There is a trade-off between keeping up-to-date with innovations and keeping a low-risk compliance profile, but firms don’t really have much choice as everyone — customers, employees, analysts and partners — expect to hear from them on social. New semantic technologies are blurring the boundaries between the physical and virtual worlds, allowing for more genuine conversations, spontaneous interactions and personalized marketing approaches that firms can take advantage of.    @AssetManagers now#BallsInYourCourt * Статията е публикувана в списание Funds Europe, бр. 117 от Юни 2013 на база MBA дисертацията на Даниел Ганев, Изп. Директор, Карол Капитал Мениджмънт

5 tips to deal with regulatory compliance issues: 
  • Establish internal SM policy addressing regulatory requirements and organizational procedures
  • Educate employees about regulatory risks and SM policy, then do a practice run behind the firewall
  • Put in place specialized technology to ensure SM client correspondence and electronic records are duly approved, stored and protected
  • Avoid promoting specific product information, instead focus on company history and CSR, investor education, etc.
  • Take advantage of the new advertisement-free approach known as education-based marekting to move traffic to physical meetings