Justify your Fees using Social Media
Created on Wednesday, 21 January 2015 13:40
Following the implementation of the Retail Distribution Review in financial services, I have been having some interesting conversations with bankers and wealth managers over the last few months about how they can use social media to engage with their clients, so I thought I would offer some thoughts here.
Let's take a basic example of a wealth manager who is charging his or her client 1% per annum to manage their investments. Assuming the client is happy with the performance of the portfolio, what additional value is he receiving for his fees? Most, if not all, managers will provide quarterly valuations, market reports and other traditional content, as well as perhaps the obligatory Christmas card. Is that enough to justify that fee? In my view, no.
There is an increasing expectation from clients that their wealth manager will make efforts to inform and educate them on an ongoing basis on digital and social media platforms. According to Cap Gemini and RBC's World Wealth Report 2014 (www.worldwealthreport.com), almost two-thirds (65%) of HNWI's expect to run most or all of their wealth management relationships digitally within 5 years, and more than half would consider leaving a firm if an integrated channel experience is not provided.
Social media is a simple, effective and free way of engaging with your clients online and justifying your fees (something the FCA continues to question firms on). It takes no more than a few seconds to post an article on LinkedIn or Twitter (still the two most popular platforms for UK wealth managers) and these posts will then be seen on the news feed of your LinkedIn connections or Twitter followers - this simple exercise, no more than a few times per week, allows you to have multiple 'touch-points' with your clients and they are more likely to remember you if your name and face are in front of them at regular intervals. A simple example - a contact of mine on LinkedIn frequently posts updates about the housing market in the South West. If I am ever asked to suggest the name of a mortgage broker in the South West, who am I likely to think of?!
Remember, social media is not about selling, so your posts should inform and educate the reader. The mortgage broker above doesn't simply announce the latest mortgage rates, he posts interesting content about the housing market, the wider economy and even some pictures of luxury homes!
There is still a significant amount of unease in the industry about plunging into a social media presence, but those firms who fail to embrace it shouldn't take for granted that their existing clients will always be happy with merely a paper valuation through their post-box every few months...