Social Media in Wealth Management

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18 January 2012

The Evolving Role of Social Tools for Superior Customer Experience


Although the adoption of social media among wealth management firms is at early stages, financial services firms have recognised its relevance as a customer interaction channel. Investing in client communication tools has become a priority, and social media is a channel they can no longer ignore. In this context, making the right social media technology choices has become paramount.

The crisis of 2008 and the economic recession following it affected the perception investors have about wealth managers and financial services providers, leading to lower levels of trust. Therefore firms have to be more proactive and dynamic with their customer interactions, with social media being one of the key new age media channels.

In a new report, Social Media in Wealth Management, Celent explores the rate of adoption of various types of social media in financial services, with a focus on the key issues and roadblocks, including compliance concerns and regulatory constraints. Celent explores how firms are using social media to reach out to their customers: for marketing, support, or loyalty among retail brokers, wealth managers, and financial planners. The report analyzes the technology offerings in the market that enable financial services firms to efficiently execute their social media strategy while complying with regulatory requirements and internal monitoring and compliance policies.

“The use of social media among wealth managers provides an opportunity to increase client communication, add touchpoints, and increase client stickiness. Furthermore, social media tools give wealth managers new modes for prospecting and measuring influence,” says Isabella Fonseca, Research Director at Celent and coauthor of the report. “However, wealth managers who have not taken the initial steps in developing a social media strategy run the risk of losing their relevance in a world where even the most thoroughly vetted and sophisticated advice can drown in a sea of peer-generated content.”

“Social media technology sales are initiated by a firm’s marketing departments in most cases, while the compliance departments participate to ensure regulatory compliance,” says Sreekrishna Sankar, Celent analyst and coauthor of the report. “The current crop of solutions is provided mainly by generic vendors that focus on compliance issues and enable archiving and audits for wealth managers and retail brokerages. But we are seeing the emergence of specific solutions focused on social media requirements for wealth management firms.”

In this report, Celent extrapolates the future roadmap for social media adoption, from the unanimous adoption of policies to the emergence of effective social media analytics and effective ROI calculation by 2013.