Social media activity around stocks is significantly impacting wealth managers and financial advisors, making it more challenging to provide professional advice, a study has shown.
In the research by Ortec Finance, a provider of risk and return management solutions for professional investors, about 95% of wealth managers and financial advisors, admitted that they are influenced by social media activity. About 82% of these professionals reported an increasing influence, with 13% stating they are “very influenced” by it. Only 4% claimed to be “minimally influenced” and 1% said they are “not influenced at all”.
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93% respondents said they believe he noise generated by social media around the stock market and specific stocks complicates their ability to offer sound professional advice. This difficulty arises from how clients react to the social media buzz and the direct impact it has on the advisors themselves.
Tessa Kuijl, managing director Global Wealth Solutions at Ortec Finance, commented: “Despite the many benefits that social media brings, our research shows that the noise around it is a hindrance to many financial advisors and wealth managers. With particularly the younger generation increasingly turning to social media as their source of information for everything from politics to DIY, they’re also using it as a source of financial advice. However, our research shows that social media is having a negative impact on many financial advisers and wealth managers themselves as well as hampering their ability to give sound professional advice to clients.”
The study underscored a growing challenge in the financial advisory industry: balancing the pervasive influence of social media with the need to provide reliable, professional advice amidst the ever-increasing noise.
