Consultancy Greenwich Associates has underlined the importance of Asian managers focusing on digital strategy after research showed institutional investors in the region were the most avid users of social media worldwide.
In a survey of 256 institutions globally, Greenwich found that 78% of Asian institutions used Facebook at least monthly, versus 39% for Europe and 28% for North America. The global average panned out at 43%.
By monthly usage, 61% of Asian institutional investors use YouTube, 59% use LinkedIn and 41% use Twitter. Again, those were top regional figures across the board (see table).
Seeking an explanation, Greenwich reasoned there was a far greater availability of professional data (Bloomberg terminals) in North America and Europe, leading investors in Asia to utilise public sources more frequently.
The consultancy pointed out that investors in North America and Europe were also heavier users of investment consultants, which takes away the need to research asset managers online.
As such, the research contradicts the notion that social media only has an application for retail investors in asset management. It found social media platforms played an underappreciated role in institutional investors’ workflows.
Four out of five respondents said they frequently used social media at work, and a third of that universe confirmed the information they consumed via social media had impacted on their decision-making process.
“Asset managers must implement an effective social media strategy,” wrote the authors of the report. “While the importance of returns is paramount, the impact of content that is unique, insightful and ideally actionable can be significant. Social media is officially part of the financial services mainstream.”
By type of institution, foundations and endowments were the largest consumers of social media, the survey found, closely followed by insurers and pension funds.
Corporate pension funds used social media the least, although nearly half still utilised LinkedIn at least monthly. Greenwich reasoned that corporate pensions were heavily regulated and could have stringent policies related to social media.
“Conversely, endowments – many of which are run by large universities – have taken a leading position in researching and interacting with asset managers via social sites,” the report stated.
The survey respondents voted access to timely news as the top reason for turning to social media. The consultancy noted that asset managers, hedge funds, banks, news outlets, research firms and services providers fed the engine that investors increasingly like to consume.
Research topics included learning more about specific asset managers, products and services and learning about market events.
LinkedIn was investors' top-rated platform for work-related purposes, cited by more than half or survey participants (52%). But interestingly Facebook was frequently used as well (43%), showing a crossover between a place to show pictures of your children to a site to consume real-time news.
However, Twitter fell to the bottom. Although a common tool in institutional finance, it has so far been shunned by the end-investor, the report stated.
Greenwich said although respondents indicated they used Facebook for professional purposes, most confirmed they would not consider it a professional took just yet.
However, with the limited launch of Facebook at Work this year, the company is expected to expand into the corporate arena, the report noted.
LinkedIn was well-rated for researching specific industries or asset management firms, as well as seeking educational contact to inform investing. Facebook was frequently used for learning about investment products and services.
Meanwhile, nearly half of respondents confirmed the information they consumed via social media platforms caused them to take action. The most common step was to research a topic further.
“This illustrates the growing importance of social media as not just a place to communicate, but also as a platform to consume information,” found the report.
About one-third of respondents confirmed that information they had consumed on social media had impacted their investment decision-making process.
While some used the information to further a conversation with management and investment consultants, others stated it impacted their investment decision and/or the selection of an asset manager.
“Knowing that these decisions can result in the allocation of hundreds of millions of investment dollars, it is notable that social media platforms are now playing a more frequent role in achieving such results,” the authors wrote.
Greenwich concluded that asset managers looking to attract investment from pensions, endowments and insurance companies needed to consider the nature of their social media presence.
“Having an updated company page should be considered table stakes, with standout firms also acting as regular contributors of content and insight, drawing potential customers back to their page again and again,” the authors concluded.