Social media key influence on investor decisions
Social media is becoming a key source of information used by investment professionals when making decisions, according to new research from Greenwich Associates.
Nearly 80% of institutional investors use social media as part of their regular activities. Around a third (30%) of these investors say information obtained through social media has directly influenced an investment recommendation or decision.
“These results show that social media is influencing decisions that can result in the allocations of billions of investment dollars around the world,” says Dan Connell, head of market structure and technology at Greenwich Associates and author of the study.
“With approximately 40% of the institutions globally expecting to increase their use of social media in the coming year, we’re projecting a further, rapid increase of social media influence in institutional investment markets.”
The study of 256 corporate and public pension funds, insurance companies, endowments, and foundations across the US, Europe and Asia found that half of institutions said information obtained on social media has prompted them to take some specific action.
Almost half (48%) of the institutional investors said information from social media prompted them to do additional research on an industry issue or topic and 37% said they shared information from social media with decision-makers at their companies.
A third (34%) said information gleaned from social media influenced a decision to work with a particular client or company and 33% said information obtained on social media triggered a discussion with their investment consultant.
The upshot, according to Connell, is that asset managers and looking to attract investment from institutions must consider the nature of their social media presence.
“Having an updated company site with relevant product details should be considered table stakes,” says Dan Connell.
“Stand-out firms will go much further by acting as regular contributors of content and insight, creating a relationship with their potential clients and drawing them back to their site again and again.”
LinkedIn is the favourite platform for professional use with more than half of study participants stating that they use LinkedIn for professional or financial purposes. Most (85%) of those investors that use the platform are doing so at least weekly.
Investors conceded that Twitter was valuable for finding opinions and commentary on market events, but said they preferred LinkedIn feeds are they were better targeted to their professional interests.
While Facebook and YouTube are by and large more popular for personal use, they are quickly gaining traction in the professional space for group discussion and video distribution.
The study also found that institutional investors in Asia are consistently higher users of all forms of social sources than their counterparts in North America and Europe.
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