When social media networks first appeared more than a decade ago, many thought that online communities would be merely digital places where young people connect and communicate in real-time with their peers around the world. Today, these social platforms are a common part of everyone's personal and professional life, as well as a key component of many companies' marketing mix.
Social media is also becoming an important source of information for institutional investors who are increasingly using it to augment traditional financial news media in order to make investment decisions. Furthermore, the use of social media has increased significantly within the hedge fund industry in recent years, and now 90% of hedge funds are using LinkedIn and Twitter, among others, to enhance marketing campaigns and prospect new investors1.
Mainstream asset managers are also increasingly betting on the social media space. They are using these channels as instruments to enhance brand and reputation, as well as to provide information and support to a diversified array of interlocutors. However, they are still facing the uncertainty of a heterogeneous and evolving regulatory framework at the country level, which continues to drive the way asset managers interact with their customer base on social platforms and, thus, is shaping promotional practices and record-keeping processes.
Although some degree of uncertainty on the regulatory side persists and social media presents various operational challenges and risks, the presence of asset managers on social media is gradually increasing. When PwC developed our initial study, #Social Media Studies, in 2013, 40% of our asset management sample group did not use social media channels at all. Today, the scenario has changed; this figure has decreased to 11%. The share of asset managers present on social media today stands at 89% (73% excluding LinkedIn), up from 60% in 2013. Within this group, the percentage of asset managers active2 on social media rose from 51% in 2013 to 68% in 2016 also registering an increase in interactive accounts3 from 9% to 21% in the same period.
Percentage of asset managers active on social media
This trend is being driven by the growing importance of social media as a communication channel in people's daily lives. Social media is no longer seen as a trendy pursuit with little relevance for the business community and the asset management industry. In fact, social networks create a direct digital bridge that connects financial advisors, institutional investors, distributors and end-investors.
In 2013, we found that the larger the firm in our sample, the more likely it was to use social media. At that time, only 46% of promoters managing less than EUR 150bn had an active account dedicated to asset management compared to 77% for those managing more than EUR 500bn. But today, whatever the size of the asset managers, they are present on social media. In 2016, 81% of small firms managing less than EUR 150bn are using social media, while those which manage more than EUR 500bn jumped to 92%.
Percentage of asset managers active on social media by company size
Managing social media communications is time-consuming and requires cross-corporate teams that can respond quickly to followers' questions without breaching compliance rules. It also requires various profiles, such as PR and Communications, Product Marketing, Sales and Relationship Management, Compliance and IT, to successfully manage social media-based communication practices. In 2013, only the largest firms had in place the organisational capabilities to deal with these additional channels. But today, smaller firms are also allocating resources to manage these channels, as they are considered key components of a company's marketing mix.
1. Agecroft Partners, The use of Social Media by Hedge Funds, 2014.
2. Asset managers "active on social media" are those with at least one account dedicated to asset management on Facebook, LinkedIn, Twitter or YouTube.
3. We consider as interactive those accounts that engage users to participate in the discussion, comment on and create content.