Many financial institutions are turning to social media as a way to attract and engage their customers. The Managing Director for TD Ameritrade, Nicole Sherrod, even works on the weekends to send tweets and interact with the firm's clients. She believes that as a result of her presence on social media, she now has "an even closer relationship with clients" and has been able to get to know them better. By posting on the weekends, she is able to show her activities after work hours and build a more personal relationship with the consumers. Twitter in particular is a useful tool to help financial service workers to navigate company guidance and industry regulations to share industry news, respond to questions from clients, and address other problems or concerns.
Since the financial services industry is based on quick decisions and reactions, stock market traders must make instantaneous decisions that affect not only themselves, but thousands of others. In the past, financial information was located by searching through old media and talking to personal connections. However, with the growth of social media outlets such as Twitter, it has become much easier and more convenient to obtain this information. According to an April report by research firm Aite Group, a growing number of institutional asset managers are using social media, with 2 out of 3 financial advisors using social media for business reasons. Young investors often feel closer to financial advisors when they can keep in touch through social media.
So why is Twitter such a valuable tool for financial advisors? Firstly, it serves as a concise and rapid way to transmit information to consumers. While traditional media such as newspaper articles have to be intensively researched and reviewed prior to being published, Twitter is immediate and provides up-to-date information. Although there are some negative effects associated with Twitter, such as releasing stories without enough research, risk is imminent in regards to financial services, and the value of being able to gain insight in a convenient manner far exceeds it. With the growing number of experts using the service, following a wide variety of people will allow consumers to be fully informed in regards to what to think and trade, as well as when the optimum time is for trade.
Due to the biased nature of traditional media, it is imperative to research various sources of information in order to access a comprehensive view of the situation at hand. This is particularly crucial in finance when media sources may differ in political agendas, but by utilizing Twitter, users are able to amass various news sources and influencers in order to generate their own educated opinions. As of May 2015, Twitter has approximately 302 million monthly active users, and this figure does not include the millions of users who sign up for Twitter simply to read other tweets without sending any. For this reason, the large group of people can help gauge overall public sentiment, and thus actually affect stock prices. A study compiled by Data Sift in 2012 found that changes in public opinion on Twitter tended to mirror share prices.
Banks and financial advisors alike are taking to Twitter to communicate with consumers directly. Due to social media regulations, financial services companies were initially slow to join the digital conversation; firms are required by regulators to archive their digital communications and also train their employees on the proper uses of social media. The general guideline is that recommendations cannot be made on the internet as even favoriting a tweet can be considered as an endorsement. Still, allowing financial companies to communicate in a human and authentic way can increase customer satisfaction and help to repair the tarnished reputation of the financial services industry.