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Advisers beware: Social media is increasingly influencing individual investors’ financial decision making.
A report from Cogent Research, Social Media’s Impact on Personal Finance & Investing, identified three major trends among investors:
Investors are highly engaged in social media. One out of four U.S. adults is engaged in social media that deals specifically with personal finance and investing.
Peer opinion influences a majority of investment decisions. More than half (58%) of high-net-worth investors have increased investments while more than one-third have reduced investments in a specific fund or company as a result of other consumers’ opinions.
Social media leads investors to question the accuracy of information delivered by official sources. More than one-third have questioned their advisers or investment firms based on what they’ve read or heard on social media sites.
“There’s a danger to dismissing social media as too new, too emerging or too small to think about yet,” Christy White, chief of operations at Cogent Research, which produced the study with input from social media public relations agency SSA Public Relations, said in a news release. “Our study clearly shows that high-net-worth investors have taken to social media in big numbers—and they are listening closely to what their peers have to say. Financial services firms that fail to keep up with, and engage in, this emerging media are basically putting the fate of their brand into the hands of consumers.”
Source: Social Media’s Impact on Personal Finance & Investing, www.cogentresearch.com.
