Social media platforms such as Twitter, Facebook and LinkedIn, haven’t appealed to private banks and wealth managers in the same way that they have to retail lenders and their clients. But there are several ways in which private banks, as well their wealthy clients, can use social networks to maximise the potential of these channels. Valentina Romeo explores
Following the launch of the updated FCA’s guidance in the summer of 2014, the industry has a much better understanding of how to remain compliant when using social media platforms.
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There are a growing number of banks on the retail side that have effectively been reaching out to customers via social media – including channels such as Pintrest and Instagram alongside Twitter, Facebook, LinkedIn and Google+.
However, social media usage on the wealth managers’ and private banks’ side to service mass affluent, high and ultra-high net worth clients (HNWIs and UHNWIs) has been minimal.
Unsurprisingly, in 2014, research firm MyPrivateBanking found that global wealth managers remained weak in social media, when compared to the retail offering.
While the retail banks achieved 67% of the maximum possible points for social media usage, the corporate and investor relations divisions come out weaker at 62%. However, the wealth management and private banking divisions had the poorest results by far, for social media engagement, with an average score of 42% of the maximum possible points.
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By GlobalDataSpecifically, the wealth management and private banking divisions of major banks had a score of only 27% for their Twitter streams when it came to user activity (re-Tweeting or having conversations on Twitter).
The MyPrivateBanking report further found that HNW clients were, in many cases, put off by social media that is ‘not interesting, not up-to-date, and not interactive’.
However, Graham Aikin, owner, HNW Social Media Solutions Ltd says most financial institutions are now finding a clear need to engage further and in varied ways with prospects and clients via social media, particularly to address the ‘future proofing’ of their business.
Aikin says it is far better to particularly engage with the next generation of clients now rather than when it is too late.
Elite networking
Even though Facebook is not a popular choice among private banks or their target clients, there are elite social platforms modelled along the lines of Facebook that the super-rich tend to use.
For instance, Netropolitan can be posed as a Facebook for rich people, and it makes no bones about its exclusivity with a $9,000 membership fee (includes a $6000 initiation fee, plus a $3,000 annual fee).
Posing itself to be an "exclusive digital country club, Netropolitan aims to create an environment for rich people to engage with each other and talk about the "finer things in life" without backlash. One must be at least 21-years old to join the exclusive network. Members’ privacy is made a priority. It also ensures an ad-free environment.
There are country specific social media platforms as well that are targeted for the wealthy, such as P1 in China and US-based Affluence.org.
Going beyond the wealthy clientele, there are exclusive online networks that cater to advisers as well clients.
UK’s Family Bhive, founded by Caroline Garnham, is an exclusive online community for wealthy clients and advisers, has a social networking side that connects HNWIs with their advisers, allowing users to share and follow wealthy lifestyle and private wealth intelligence based on personal preferences.
Disruptive capabilities
According to Aikin, a LinkedIn Company Page remains the starting point for most firms, followed by a Twitter account. But many firms are beginning to train and empower their relationship managers (RMs) to use LinkedIn for prospecting and client engagement, and Aikin says this trend is set to continue in 2015.
Consultancy firm Mercer’s 10 priorities for wealth management advisors in 2015 ranks ‘adopting a client communication technology strategy’ among the top objectives.
It states: "Disruptive technology is transforming the wealth management industry and we expect the pace of change to accelerate with increased use of cloud computing, applications, social media and mobile (CASM)."
According to Aikin, advisors are using social media to inform and educate their clients about wider issues such as the importance of tax planning, housing market trends, and key financial planning themes.
Particularly, in the post-RDR world, advisors see social media as a way to provide additional value for the fees they charge.
Audio-visual advantage
One of the areas for private banks and wealth managers is the growing importance of content marketing. Whilst most firms see the need for a social media presence, few are providing regular, unique content.
Amit Pau, MD at the investment and advisory firm, Ariadne Capital says the growth of social video – Instavid, Vine, Snapchat, Hyperlapse -is up and coming, and holds major benefits for brands.
He says: "First, audio-visual storytelling is emotionally compelling and secondly, vloggers and micro-vloggers are a great way of getting your message in front of your audience. The banking sector can utilise this by placing their product advertisement in relevant places and by ensuring that their content is interesting and eye-catching."
Aikin adds that more firms appear to be outsourcing their content creation to third-party authors, who can provide a steady flow of interesting content.
However, he believes some of these providers merely provide ‘white label’ content for any firm to use, so it is recommended that firms use internal resources for content creation.
Aikin also stresses on the potential of videos to educate firms’ audience about wider themes and provide to financial education.
Targeted efforts
Pau also says that firms can strategise, firstly, by evaluating the program goals, objectives and marketing plans to see where social media can augment efforts.
"They then identify the audience on specific social media platforms, and learn where their ‘watering holes’ are within and outside of social media – pinpointing where to best target and gather information to suit their objectives.
"A firm will then look at how their internal capabilities can be best applied to these project attributes in order to initiate action and incorporate social media into their efforts."
An undoubtedly attractive solution, Aikin thinks, is the growing emergence of social content relationship management (CRM) – by incorporating a firm’s and advisers’ social media interactions into their traditional CRM system – in order to gain a greater understanding of client needs.
Pau agrees that lenders must utilise big data effectively in order to keep track of core demographics and to inform an ever-fluid customer base.
"Social media holds a giant bank of data on its users – accessing and using this can be at the core of an innovative new banking business model," he says.
