To tweet or not to tweet?
Many people in positions of responsibility in the asset management industry will remember long-playing records and tapes being usurped by the CD, which in turn is close to becoming obsolete through digital down-loading. Similar flexibility and adaptability to new technology needs to be shown by asset managers in their harnessing of social media such as Twitter, Linked-In, YouTube and Facebook.
There are several drivers for change. Current and potential clients of asset managers increasingly consume their news and conduct their research into new products on the web. The frenetic blackberrying of business people on commuter trains, in airports and by the pool on holiday are reminders of this trend. In recent surveys by BE: Europe and British Business Surveys, 73% of business people interviewed said that they read their news online, the same percentage of them researched products and services online whilst 25% read blogs. Media consumption habits are also changing with young people preferring to read their news online or for free rather than buying a hard copy newspaper.
Another group of asset management stakeholders whose use of social media is high is the media. Research by Csion found that journalists are glued to Google with 81% using blogs for researching stories and 40% sourcing stories by Twitter. Social media is increasingly becoming the most influential source of information on stories published by journalists over and above their traditional data sources. Journalists of all generations are tweeting and blogging their news and views and searching for ideas online.
Where are the asset managers on the spectrum of social media adoption? On analysis of the social media output of 30 randomly-selected institutional asset management firms, we found that only a sixth of institutional asset management firms use social media as part of their communications mix. This level of adoption may be influenced by perceived regulatory or compliance issues. In some cases there may be a lack of experience of how social media actually works on a “what is twitter and how does it work” level. People are not clear about how it can help an organisation communicate with its stakeholders.
However, those working in the asset management industry may be more confident about communicating via social media for personal use, many of you may be reading this on your blackberries or iPads, rather than for the benefit of organisations. The advent of online forums for asset managers and pension fund trustees such as SchemeXpert and Mallowstreet bears witness to this. At a recent drinks party organised by the latter, the exchange of business cards was forbidden and attendees were encouraged to correspond afterwards via its virtual online community.
Those asset managers whose focus includes targeting the retail investor either directly or through intermediaries appear to be more open to social media. In its annual Financial Professionals Social Media Adoption survey, our client American Century Investments found that social media usage and experience among US-based fund management intermediaries had increased to 86% from the previous year’s 73%.
Asset managers need to start experimenting and take some steps into the world of social media. At the very least, it is clear that social media is becoming an increasingly important communications tool for journalists and offers asset managers additional ways of communicating with its stakeholders in a very personal and interactive way.