Social media is everywhere. From hashtags on television shows to social account details on business cards, it’s impossible to escape the way it dominates our lives today.
Yet, it is still a relatively unknown world for many finance professionals.
Much of this is because social media takes time; something busy finance professionals often don’t have. Social media use is growing in all demographics, and people increasingly base purchase decisions around a company’s or an individual’s online presence. A social media presence is becoming a vital tool for finance professionals. It is now a “must do,” and a great way to build trust and credibility.
The Triumph of Social Media
Interest in social media and its use has rapidly grown over the past few years.
The latest Pew Research data shows 74% of adults with internet access in the US use social media. Although women remain the more regular users of social media, the gender gap is closing. Older demographics are increasingly finding their way to social media, too, with nearly 50% of online adults over 65 using social media.
In addition, Pew’s data shows social media use is prevalent in lower earning brackets as well as higher ones. The increasing understanding of how a social media presence can affect a person’s career plays a part here. Business professionals now understand the value of a social presence and thus are more likely to log on.
Facebook remains the most popular platform. Nearly half of the UK population, for example, now has a Facebook account, with LinkedIn prominent among professionals (Social Media Today).
Social media use is growing, but what about finance professionals and social media? Are investors and finance experts less likely to be on social media?
LinkedIn and Cogent Research recently looked into the matter and found high net worth investors active on social media. The study found that around five million investors in the US and Canada use social media. In addition, the more affluent the investor, the more likely he or she is to use social media for decision-making.
Although high net worth investors are using many social media platforms, LinkedIn remains the most trustworthy of networks in the eyes of many. For investors it offers the opportunity to form professional connections, and as a platform it can provide detailed tools for finding more information.
What the above shows is that social media use has been triumphant in attracting audiences in all demographics. As more people use a variety of social media platforms, their behaviour also changes and social media becomes more important in everyday decision-making.
A New Way to Make Decisions
Social media has had a huge influence on how people behave as consumers, and it is increasingly doing the same in the global financial marketplace. Social media is an essential part of business strategy due to this changed consumer behaviour.
One of the easiest ways for a business to gain more trust and credibility is by having a strong online presence. Social media is the new word of mouth and people actively seek recommendations on these platforms. A Forbes article on social media reported that 77% of buyers are more likely to use a company where the CEO uses social media, while 82% of consumers trust a company more if the CEO is an active social media user.
Social media has also broadened horizons for consumers. Whereas a consumer used to base decisions around the recommendations of his or her closest friends and family, social media has now opened up a completely new world.
The choice available has increased, which means that for a business or an investment venture to succeed, a social presence is a must-have. Consumers will often overlook businesses that have no social presence, in the same way deal seekers are increasingly doing.
The influence of social media isn’t just great for consumers; businesses have also benefitted from broadened horizons. As well as communicating with a wider customer base, social media also provides more opportunities to build business partnerships.
Businesses can improve the way they offer their services through new partners or just increase their own understanding of the field they work in. A social media presence becomes a vital tool for not only building customer relationships, but for enhancing the way the business operates.
Ease of Information
Social media has had a huge influence on how people find new information.
Another Forbes study from 2012 looked into how business professionals feel about social media and finding information. Interestingly, professionals were divided on whether social media has made finding information easier or more difficult. The people who didn’t spend a lot of time on social media were the ones who found it had made finding information harder. Professionals who actively engage in social media broadly agree that it has had a beneficial influence on finding information.
Building Trust as a Finance Professional
What does this mean for a finance professional? It’s easy to overlook or understate the importance of social media in fields such as finance, but everything we know applies to finance professionals as well.
Phil Sanderson recently blogged about how entrepreneurs research potential investors online. Sanderson, a venture capitalist, regularly receives pitch ideas through social media, which clearly shows the finance sector uses social media presence as a measurement of trust and a platform to find information.
While having a social presence makes venture capitalists more accessible for deal seekers, it also acts as a trust signal. Who would you trust? The investor who is open on social media and discusses the industry, or the one with a five page website that won’t discuss what they do?
Investing is often based on trust and the ability to build personal relationships as much as it is on a brilliant business plan. Investors, as well as entrepreneurs, are interested in finding the right people as well as the right business opportunity. Social media makes it easier to get to know the right people and to find the connections that will be fruitful.
The latest data from Brunswick research supports this. The study asked social media and investment related questions of nearly 500 institutional investors and sell-side analysts around the globe.
Nearly 70% believed social media’s influence for investment decisions would increase in the future. Almost 30% admitted that they have personally followed up on investments identified on social media platforms.
It is much easier to focus on finding new deals and investment opportunities on social media platforms. If you connect with other people in the industry, then you can receive recommendations, check what other investors are doing and discover information about completely new industries.
Another survey showed 52% of institutional investors already use social media as part of their research process. This could potentially mean many more deal-making opportunities.
It is a great way to find those initial connections. As you can build your relationship and trust online, face-to-face meetings are much more focused on closing the deal or getting to the point. You are likelier to save time by going after the fruitful connections once you’ve already established the relationship through social media.
Taking Advantage of Social Media
For people who are looking for deals or entrepreneurs who are seeking funding, finding a finance professional or an investment firm that is active on social media can be a real sign of trustworthiness. As the above shows, people are much more active on social media and a business’ social media presence has a huge impact on the way people make decisions.
For a finance professional, social media platforms are becoming an increasingly important way to build relationships. You are more likely to find better deals and more information if you actively engage with other industry leaders. On top of this, increased activity boosts your own trustworthiness online, providing you with even more opportunities to find deals.
Of course, you need to learn the right ways to use social media as a finance professional, but it isn’t as difficult and time-consuming as many might think.
The benefits of having a strong social media presence definitely outweigh any possible time management issues you may have, and there is always the option of hiring a third party to manage your social brand. For a finance professional, social media is an essential tool to use and a modern path to trustworthiness and credibility.