Although institutional investors have not yet been completely won over to using social media for professional purposes, the majority believe that in the future they will grow in importance as a source of financial and business information and as a professional communication channel
While today only 30% of a sample of institutional investors worldwide regularly consult social media, these investors are increasingly using information from social networks on companies they (might potentially) invest in. These are the findings of a survey carried out by leading French financial communication agency Havas, in conjunction with AMO, the leading global network of strategic and financial communications consultancies. The aim of the survey was to draw up a picture of social network usage for and influence on investor relations. The poll, carried out among 105 institutional investors in 12 countries, indicates that their current patchy or reluctant usage of social media does not reflect the positive long term vision that these financial professionals have of using such tools.
Changes ahead in the role of social media in financial information?
Social networks currently play a very small role in investor relations, but the majority of investors (82%) expect them to grow as a source of financial information. Moreover an increasing number of large firms envisage using social media to communicate better with their investors. Charles Fleming, a partner at Havas Worldwide in Paris, believes that “even though institutional investors are as yet not spending a great deal of their time on the social networks, they believe they will gain influence in the future and will play a growing role alongside other tools which companies use to communicate on financial issues.” This prediction is echoed by over a third of the investors polled, who see social media as a welcome innovation making news dissemination more direct and rapid, and serve as a useful tracking tool. However, among the Asians, North Americans and Europeans who responded to the survey, there were fewer institutional investors in France who acknowledged the growing role of social media in the coming years – 70% compared with 82% overall for the sample.
Companies and investors still hesitating to communicate on social networks
The survey further revealed that a large majority (85%) of the institutional investors polled believe that social media lack credibility as a professional source of information, and 16% actually dismissed them as worthless in a business context. Institutional investors in France are especially sceptical about the role of social media in investor relations, with only 10% consulting social media on a regular basis, compared with 30% overall, and fully half judging social media to be irrelevant, compared with 16% of all respondents. It is hardly surprising that when asked which social sites they visit most often for professional purposes, the financial professionals mentioned investment forums, and investment and financial services blogs, way ahead of Twitter and Facebook. However, professional social network LinkedIn took second place in this list. Meanwhile the main newswires and corporate websites are still considered the most reliable sources of financial information by these investors.