(Citywire) When I tell people that my job is social media specialist in the finance sector, I generally get the same response: tough job.
This is understandable, as much of the asset management and finance industry still approaches social media as a foreign language.
But the needs of social media are increasingly dictating the terms of business strategy, as the medium becomes the message. Wealth managers cannot afford the luxury of avoiding Twitter, Instagram et al, when this is the language their clients increasingly speak.
Ahead of the game
Always ahead of the curve, in a 1999 interview David Bowie offered some insight into the changes now playing out in how we connect and communicate.
Throughout his lifetime, music, and especially rock and roll, was the vehicle for change, inspiring its audience and shifting societal norms, he noted.
He foresaw a future were something much like contemporary social media usurped that role, however: ‘The audience is [now] as important as who is playing,’ he said. ‘Context and the state of content is going to be so different to anything we can envisage at the moment, where the interplay between the user and the provider will be so in simpatico it’s going to... crush our ideas of what mediums are all about.’
A new reality
This vision is now our lived reality. The average user spends almost two hours a day engaged on social media, and 39 million access via a mobile device.
The obvious rebuttal to these huge numbers is to ask what overlap there is between phone dependent teens and the consumers of financial products. But this neat distinction fails to capture the way social media disseminates messages.
Word of mouth was traditionally how wealth businesses gained business: stereotypically, a round of golf followed by a round at the bar. However with social media Womm (word of mouth marketing) has not only changed, it has also greatly accelerated.
If someone is happy with a service or product they will tweet, or post about it, reaching an audience of hundreds (if not thousands) of peers instantly.
It is also how younger generations increasingly learn about new products. But it is not only about information, social media is also dictating how we consume products too.
This month, Instagram began to trial direct purchases on its platform, so users can buy goods and services on site, while remaining a captive audience. Facebook, the owner of the pic sharing site, will then retain payment information for future use and takes a few basis points on the back end of every sale.
How long will it be until you can start saving and investing directly? Plum, for example (an app I use myself) updates you on your bank balance and helps you save and withdraw cash, all via Facebook messenger.
Social media: replacing or enhancing advertising?
Millennials are huge fans of ad-blocking, so display and programmatic advertising are increasingly failing to find their intended audiences. According to Forbes data, 76% of those using ad blockers were 18-35.
This is one of the reasons a lot of businesses now are looking at influencer marketing, people within their target audience’s demographic with thousands if not hundreds of thousands of followers, who pay attention and most importantly engage with what their chosen influencer says.
A good example of financial brands starting to utilize influencers is Aviva, which recently teamed up with a home decor influencer to promote their investing platform.
This influencer has 154,000 followers and had over 1,000 likes from this post, giving an engagement rate of 2.19%. For context, an engagement rate between 0.33% and 1% is considered to be very high, with expected reactions between 33 and 100 for every 1,000 Twitter followers.
Goldman Sachs, under new chief executive David Solomon ― part time DJ and friend to marketing mastermind P Diddy ― is also extremely savvy about its online proposition.
Following his appointment, the bank has radically rethought its distant, Wall Street insider image. In 2016 it launched mass-market online saving account Marcus, initially into the US, and then into the UK earlier this year. The changes have been reflected in a revised casual dress code, as it sought to compete for high flying tech talent with the less suited-and-booted starts ups.
The arc of change
The arc of these changes is only just beginning to impact the gravity of wealth management, but its pull is only going to get stronger.
Having hosted several marketing lunches for sector specialists across Europe, a recurring theme is that social media strategies have frequently been in place for less than 12 months, and that there are varying degrees of success working with compliance teams.
Just being able to get resources can be a headache, with most saying there was much room for improvement.
We have focused a lot on social media and millennials as the target audience because baby boomers, who are wealth management’s current target audience, are the wealthiest generation in history. This will soon change once their generation starts passing on its wealth to millennials, an ‘inheritance boom’ is on the horizon, and millennials are set to inherit $4 trillion (£3.1 trillion) across the UK and North America.
The race is on to win that generation’s loyalty, and so the industry will have to make like David Bowie and embrace ch-ch-changes in how it markets itself.