News Column

Social Media Fuels Investor Decision Making

February 22, 2013

One-third (34%) of affluent investors are using social media platforms like Facebook, LinkedIn, Twitter, YouTube, and company blogs specifically for personal finance and investing (PF&I) purposes. While most investors continue to rely on a variety of resources for investment information, nearly 70% have reallocated investments, or began or altered relationships with investment providers based on content found through social media, thus reflecting the importance of a strong social media strategy for asset managers and distributors. These and other findings are included in a new report, Social Media's Impact on Personal Finance and InvestingTM, recently released by Cogent Research. The report is based on a nationally representative survey of over 4,000 investors with more than $100,000 in investable assets.

Investors who use social media for PF&I purposes are using various platforms to form first impressions about providers, and their decision to use a firm's investment solutions. Regardless of the platform, investors primarily turn to social media to conduct research on investing, products, and companies or to seek advice regarding investment decisions. "Today's investors' are scrutinizing ˜traditional' sources with content and commentary they are finding through social networks, and are becoming much more critical and conversant when it comes to their investment choices," said Remy Domler Morrison, Project Director and co-author of the report. "On a positive note, social media is also motivating investors to engage more with their advisors and investment firm representatives, which can lead to more asset gathering opportunities for providers."

For financial companies, investors' use of social media for PF&I can be a double-edged sword. While engaging in social media presents the opportunity to increase and develop relationships and trust, it also presents the risk of getting negative feedback. "For every positive comment and favorable investment decision comes the possibility for damaging content. However, the larger risk to a firm is ignoring negative comments that may already exist. Overall, there are significant opportunities to strengthen brand equity for firms that regularly pursue strategies to foster positive relationships with brand followers and address negative sentiment," says Tony Ferreira, Managing Director at Cogent Research. In general, investors recall a higher ratio of favorable to adverse brand-related content for several firms on social media, including Fidelity Investments, ING, and Vanguard.

Top 10 Brands with the Highest Ratio of Positive to Negative Impressions Via Social Media BASE: Among investors exposed to respective brands on Facebook, YouTube, LinkedIn, and/or Twitter

Rank Provider

1. Fidelity Investments

2. ING

3. Vanguard

4. USAA

5. Charles Schwab

6. John Hancock

7. American Funds

8. Wells Fargo

9. T. Rowe Price

10. Janus -------------------------------------------------------------------------------

Source: Cogent Research Social Media's Impact on Personal Finance and Investing

About Cogent Research Cogent Research helps clients gain clarity, obtain perspective, and formulate direction on critical business issues. Founded in 1996, Cogent Research provides custom research, syndicated research products, and evidence-based consulting to leading organizations in the financial services, life sciences, and consumer goods industries. Through quality research, advanced analytics, and deep industry knowledge, Cogent Research delivers data-driven solutions and strategies that enable clients to better understand customers, define products, and shape market opportunities in order to increase revenues and grow the value of their products and brands.


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Source: Copyright Business Wire 2013


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