Social media key to regaining investors’ trust

Software financial planning advisers financial advisers cent global financial crisis financial markets

24 July 2013
| By Andrew Tsanadis |
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Financial advisers tend to overestimate the average investor's knowledge of financial markets — but social media could help to stem this trend, a US study has found.

The Accenture survey conducted among so-called Generation D (‘D' standing for digital) and 400 US advisers found that 42 per cent of advisers believe investors are extremely knowledgeable about investing, while only 12 per cent of investors regard themselves as very knowledgeable.

The survey also revealed that advisers often assume a threshold for risk higher than what the client can actually endure, particularly those clients who were significantly affected by the global financial crisis.

According to i-Impact Group president Claudio Pannunzio, clients tend to regard advisers' communication on investment topics and products as promotional and beyond their comprehension in terms of investment knowledge.

Despite being a US-based study, he said the findings represent a powerful opportunity for advisers in sophisticated markets like Australia to increase the frequency of client communication, with a particular focus on education.

For advisers servicing Gen D clients, digital communication and social media will provide the means for them to provide increased investment education and regain their trust, Pannunzio said.

With more than 50 per cent of US advisers recognising the role of social media in client interaction, the study also found that 40 per cent of advisers landed new clients through Facebook and 25 per cent through LinkedIn.

"Ultimately, social media will empower advisers to stay relevant with their clients, build credibility and regain trust," Pannunzio said.

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