Social enterprise: The future of wealth management

By Vikram Barhat | February 8, 2012 | Last updated on February 8, 2012
4 min read

Leading advisors are moving to social enterprise. They are using tools and strategies to connect and collaborate with their clients, teams and assistants.

Clients expect advisors to know what they like, what they are talking about and whom they are connected to, said Renny Monaghan, vice-president of industry solutions at CRM firm and a panellist on a recent webcast hosted by

The central theme of the seminar, titled ‘Becoming a Social Advisor: The Next Generation Advisor’ underscored the need for advisors to use social media to manage and maintain relationships.

“It’s interesting how the wealth management industry has evolved; twenty years ago the first dollar that was spent was really spent on back office functions and trading functions,” said Monaghan. “And as we’ve evolved and matured as an industry, we’ve come to grips with the fact that the wealth management industry is all about relationships.”

The primary reason investors change advisors is the loss of trust, he said. “It really is all about the relationships, and [there are] tools that are aimed to help advisors really nurture and develop and deepen those relationships.”

New social media tools play an increasingly important role in finding and fostering relationships. Part of their appeal lies in their easy availability, regardless of the size of the outfit using them.

“Whether you’re the world’s largest financial services company or the world’s smallest, whether you’re an independent advisor or an insurance agent or a mortgage broker, everybody has the same access to the same tools,” said Monaghan.

Changing technology paradigms and new trends are, therefore, leading advisors, their tools and business in the direction of social enterprise.

The ongoing communications revolution has spawned a multitude of social media applications both on the client side and on the business side.

Financial advisors need to consider how social media has integrated with mobile devices and how open technologies are changing consumer lives, said Monaghan.

“I think everybody has an idea of where this is going,” he said. “But to [put it in perspective], back in 2009 we reached a [point] in technology history where social users surpassed email users.”

In time, he said, that point will come to be recognized as a watershed moment in the history of social media.

“That was pretty big; social came on really quickly, it’s been adopted by people to share and collaborate,” he said. “[It introduced] a new paradigm about having information brought to you, as opposed to having to go to dig for it. It’s been wildly successful.”

According to one estimate, said Monaghan, there are almost two billion social media users and counting.

An irrefutable measure of its popularity is the amount of time people are spending on social media. “If you look at Facebook, it’s eating the web,” he said. “The average Facebook user spends four hours a month on Facebook, and that’s where the eyeballs are. That’s why these applications are incredibly sticky.”

Alongside social media, there’s another revolution afoot. It’s about the way users are accessing these services. “[Sales of] desktops are flat, laptops are growing a little bit, and we all know that the explosion of smart phones and tablet devices is really changing the way that people collaborate, not just in their consumer lives, but also in business.”

A Morgan Stanley study of technology trends reveals that 71% of CIOs wouldn’t allow tablets inside the enterprise in 2010, but a year later, 51% of them were actually purchasing them for their employees.

“We’re seeing this really dramatic shift; social is having huge influence, mobile is having huge influence,” said Monaghan.

But that has also created a social divide—one between the employees and their firms. “Is it motivating to have an IBM 3270 green screen for these folks to work with when they’re used to this rich mobile experience?”

Increasingly, the combined force of social media and mobile technology is compelling companies to think about ways to bridge this social divide.

“They’re becoming what we’re calling the ‘social enterprise,’ and they’re adapting these new technology paradigms, the concept of social media and mobile [technology], and stitching things together to empower the next generation.”

Firms engaged in building a social enterprise are now marrying internal client information with social information clients are putting out into the public domain through social networking sites.

“Today clients are expecting their financial advisor to know what they’re saying, what they like and what they’re connected to,” he said. “And the financial advisors today are plugging that information in and completing [their client’s] social profile.”

There is another way that companies are becoming social enterprises, said Monaghan: by increasing the amount of collaboration within the organization.

“We know that our firms [are] becoming more complex every day; whether it be compliance or demands from our customers for different products, it’s no longer good enough just to be a broker,” he said. “Now you need to provide insurance advice or financial planning advice; you have [to hire] specialists, there’s more of a team concept around serving your customer.”

Wealth management today is all about relationships, he added. “It’s about having that white-glove, high-touch service.”

Vikram Barhat