While many financial advisors see social media tools as increasingly critical to their success, findings from a new survey point to a mismatch in how advisors perceive their clients and how clients actually feel, a survey shows.

While many financial advisors see social media tools as increasingly critical to their success, findings from a new survey point to a mismatch in how advisors perceive their clients and how clients actually feel, emphasising the need for advisors to focus on better understanding investors' views and objectives in the digital age.

The survey was published in Accenture’s report, Closing the Gap: How Tech-Savvy Advisors Can Regain Investor Trust, and found that 48 per cent of financial advisors interact daily with clients through social media. However, while it confirmed that advisors recognise how the rapid adoption of digital technologies is changing their relationships with clients - for the better - it also illustrated that they “significantly overestimate” investors’ risk appetite, as well as in terms of how investment savvy they are.

According to the survey, nearly half of advisors (49 per cent) believe that firms which fail to leverage social media will lose clients to those that do. Perhaps unsurprisingly, then, 74 per cent think social media helps them increase assets under management, while half claim to have successfully used social media to “convert prospects into clients,” Accenture said.

“Wealth management firms that fail to adopt social media will miss an opportunity to build relationships with clients on their terms,” said Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services. “This is becoming increasingly critical as investors are demanding online resources to help them better understand investment strategy and advice.”

However, as he points out: “The use of social media to interact with clients is a differentiator for advisors today, but it will be mere table stakes in the not-too-distant future.”

Advisor-client mismatch

With this in mind, it is interesting to note that, according to the survey, 42 per cent of advisors describe their clients as “very knowledgeable” about investing, compared to 12 per cent of investors who regard themselves in this way. Similarly, just 1 per cent of advisors describe their clients as “not knowledgeable” in terms of investing, compared to 25 per cent of investors who identified themselves in this way.

Furthermore, advisors in the survey were more than twice as likely as investors to perceive their clients as “aggressive” investors, at 28 and 13 per cent respectively. But perhaps the most telling finding is that while 67 claim to have a “personal relationship” with their clients, only 38 per cent of clients consider their relationship as being “personal”.

“Our research suggests that financial advisors need to focus on better understanding their clients’ views and objectives to foster closer, more trusting relationships,” Pigliucci said. “With the explosion of ‘self-serve’ digital investment channels and increasingly complex investment products, the importance of this will only grow.”

Interestingly, recent findings from The Futurewealth Report: Helpful Investment Technologies - part of the Futurewealth Project published jointly by SEI, Scorpio Partnership and Standard Chartered Private Bank - suggested that social media aren't perhaps as highly regarded by investors as is generally thought. In this report, respondents ranked a firm’s social networking presence and blog posts as the least important factors when evaluating a financial provider - a somewhat surprising outcome given the social media craze.

“Firms need to implement deliberate social media strategies and provide their advisors with the tools and guidance to make their digital interaction meaningful,” Pigliucci said. “This will help create tighter client relationships, increase the firm’s visibility on digital channels and, ultimately, drive business for the institution.”

The survey involved 400 US-based financial advisors, of which 70 per cent were male and 30 per cent were female. The survey of US investors involved 1,005 high-income investors, comprising an even mix of men and women who use social media at least every week, the firm said.