Financial Advisors and Social Media: Changing with the Times
Social media was once seen as the ultimate marketing tool for financial advisors seeking more market share. It provided a platform capable of reaching a vast audience, connecting with clients and prospects, and tracking the success of marketing initiatives. It was nominally free outside of the effort it took to post content. However, in recent years, there has been a growing sense that social media is losing its effectiveness as a marketing tool. In this article, we’ll explore some of the reasons why this may be the case and what financial advisory firms can do to adapt.
Market Saturation
One reason the usefulness of social media may be changing is its increasing market saturation. With the proliferation of social media platforms and the sheer number of businesses vying for attention on these platforms, it’s harder to stand out than it used to be. In the early days of social media, it was relatively easy for businesses to get noticed and attract a following. Now, cutting through the noise and reaching a significant audience can be a real challenge. For example, the average Facebook post only sees 0.07% engagement, while only 16.5% of internet users aged 16-64 named brands’ social media updates as a source of brand discovery (See more 2022 benchmarks).
Another factor contributing to the declining effectiveness of organic social media marketing is the rise of paid advertising on those platforms. In 2022 alone, over $65 billion in marketing dollars was spent on social media. In the past, financial advisors could rely on organic (i.e., unpaid) reach to get their content in front of users. However, as the platforms have matured, and their algorithms have changed, they have increasingly favored advertisers and incentivized brands toward paid advertising, meaning businesses must now pay to reach their target audience – even their own long-time page followers or fans. Between the inundation of advertising and a decline in user engagement in those platforms, what was once an easy way to get in front of your clients and prospects has become more challenging and requires a new strategy.
Social Media Algorithms
In addition to advertising and trust factors, social media algorithms have also changed in ways that limit the reach of business content. Every social media channel’s algorithm is different but is typically based on a few factors – relationships, interests, relevance, and popularity. Many platforms now prioritize content from friends and family over content from businesses, making it difficult for financial advisory firms to get their message in front of a large audience. This has led to a situation where you are now forced to pay for advertising just to reach the same number of people that you were able to reach organically in the past. Another content-related challenge is posed by the multiple ways that individuals utilize social media. No longer reserved for messaging from people and businesses the user is interested in, social media has become a source of news, a marketplace for goods and services, and even entertainment. At a certain point, all this exposure can lead to “social media fatigue,” making some potential marketing opportunities harder to capitalize on.
Metrics, Metrics, Metrics
Another issue is the lack of reliable metrics for measuring the success of social media marketing campaigns. While it’s easy to track likes, comments, and shares, it’s much more difficult to determine the impact these metrics have on business development and revenue. This can make it difficult for financial advisors with limited marketing budgets to justify the time and resources they are putting into their social media marketing efforts.
You can alleviate some of these concerns by ensuring your website has analytics tracking enabled, and by using UTMs in your links to attribute where traffic comes from or how campaigns are performing over time. At Beyond AUM, we pull all marketing efforts into dashboards to visualize long-term trends, as well as better understand what channels perform best, what type of content reaches the most people, and where paid advertising or boosting is necessary to supplement organic brand building.
Communities Matter – Even Digital Ones
So, what can you do to adapt to these changes and continue to use social media effectively as a marketing tool?
One option is to focus on building a loyal and engaged community of clients and referrals, rather than trying to reach a broad but potentially less interested audience. This requires a long-term commitment to creating valuable content on a consistent schedule and interacting with clients and other respondents genuinely and authentically. While “posting and running” is an easy way to build a digital footprint, engagement on these channels requires a much more strategic approach.
It’s important to connect the dots on your content marketing strategy and develop interactive ways for your clients and prospects to engage and refer. Being strategic is more important than volume. That means that you might need to think differently about how you define success. Instead of worrying about how many times you post, you might want to post less often and be more thoughtful about how and why you’re posting. Then, in Beyond AUM’s spirit of COPE (Create Once, Publish Everywhere), you can utilize those deeper-value posts to “boost” or “promote” your content. A key aspect here would be to make sure you’ve created a highly segmented ad audience on these platforms. For an example of what that would look like in practice, check out our sample workflow for Gray Divorce here.
Next, diversify and use a variety of marketing channels in addition to social media. In our blog, “Why Your Financial Advisory Firm Should Adopt Multidimensional Marketing,” we discuss how to stay relevant and continue to obtain the best possible results, you need to explore the marketing world from the viewpoint of your clients and to meet them where they are. Social media is one of those locations. Others include email marketing, content marketing and SEO, public relations and media, paid search and display advertising, and influencer marketing. By using a combination of different tactics, you can reach a wider audience and better track the impact of your marketing efforts. Here is a resource on 8 more ways to increase traffic to your site.
It’s essential for financial advisors to carefully consider their marketing budget and allocate their resources to the channels that will be most effective for your specific goals and target client persona. It may be beneficial to experiment with different tactics to see what works best for your firm. We often run A/B tests on different types of content or compare similar periods of performance over different cohorts to understand audience differences. At a high level, you can take a look at where you’ve invested marketing dollars to date and what the return has been.
Finally, it’s vital to stay up to date on the latest developments and changes in the social media landscape. This includes understanding the algorithms and how they impact the reach of content and being aware of new features and tools that can help you effectively market your services. We recommend the blogs by HubSpot, Buffer and WordStream to start. These should help you uncover data-driven strategies, social media tactics and SEO and advertising approaches.
While social media may be undergoing some change as a marketing tool, it can still play an important part in your marketing mix. By adapting to the changing landscape and using a variety of tactics, firms can continue to use social media effectively to reach and engage their audience. Want to learn more about how Beyond AUM helps financial advisors create valuable marketing tactics? Reach out, we’d love to hear from you.