Influence and Trust in Social Media: How Will Investors Separate the Wheat from the Chaff?
2 April 2012
Facebook pages. Twitter Accounts. Chatrooms. Blogs. Dedicated client social networks. All of these venues are not only places for people to “connect”, but have become sources of information on trends, investments, and companies. As Celent has noted in multiple reports and blogs, trends continue to show that individuals are trusting financial institutions less and less, and themselves and peers more and more. To adapt to these trends, wealth managers have begun launching Facebook pages, Twitter accounts, blogs, chatrooms, and private client networks where investors can post messages, follow one another, read opinions, develop charts, etc. In all of these venues, one thing remains constant: the wealth manager provides the “sandbox” in which clients play, but remains largely a brand in the background (and not liable for any advice or content made on the network). By doing so, the wealth manager hopes that the client’s loyalty to his peer network will translate into loyalty towards the wealth management brand. Furthermore, by keeping a disclaimer that the institution does not endorse any opinions made on these forums, the wealth manager elevates the advisor’s expert opinion from the rest. But what happens when “John Smith” with 200 followers says something that directly contradicts what your advisor says? Whose opinion with have the biggest social impact? Does the advisor’s official status influence you as much as does the number of John Smith’s followers? If he had 1,000 followers, would it make a difference? These questions are no longer hypotheticals. These questions can have real consequences on the advisor’s book of business and the wealth manager’s bottom-line. Luckily, wealth managers need not grasp in the dark to answer these questions. Social psychology has been addressing the concept of trust of social impact for decades. In a series of blog posts, I will present some social psychology theories that are particularly relevant to social media and how wealth managers should think about implementing strategies. The first theory examined later this week will be “Social Impact Theory” and how it may answer the above questions.