Institutional investors are increasingly using social media sites, such as Twitter and LinkedIn, as inputs that inform their investment decision-making, according to new research from Greenwich Associates.
A new study from the firm finds that almost 80% of institutional investors use social media as part of their regular work flow; and, it reports that approximately 30% of these investors say that information received through social media has directly influenced an investment recommendation, or decision.
The findings are based on a survey of 256 institutional investors, including corporate and public pension funds, insurance companies, endowments, and foundations in the U.S., Europe and Asia.
Greenwich reports that 48% of investors said that information from social media prompted them to do additional research on an industry issue, or topic; 37% said they shared information from social media with decision-makers at their firms; 34% said information from social media influenced a decision to work with a particular client or company; and, 33% said information obtained on social media triggered a discussion with their investment consultant.
The survey found that LinkedIn is the top source for professional social media usage, with 52% penetration in the institutional investor segment. And, it said that 85% of investors that use the platform are using it at least weekly. It also notes that the Twitter news feed is seen as useful for seeking opinions or commentary on market events, but that LinkedIn feeds are seen as being better targeted for professionals.
Greenwich also notes that Facebook and YouTube are the most popular platforms for personal use, and that they have also gained traction in the workplace to facilitate group discussion and distribute video content.
The survey also found that institutional investors in Asia are bigger users of social media than those in North America and Europe.
“These results show that social media is influencing decisions that can result in the allocations of billions of investment dollars around the world,” says Dan Connell, head of market structure and technology at Greenwich Associates. “With approximately 40% of the institutions globally expecting to increase their use of social media in the coming year, we’re projecting a further, rapid increase of social media influence in institutional investment markets.”
Greenwich says that the survey also demonstrates that investment firms looking to attract assets from institutions must consider their social media presence. “Having an updated company site with relevant product details should be considered table stakes,” says Connell. “Stand-out firms will go much further by acting as regular contributors of content and insight, creating a relationship with their potential clients and drawing them back to their site again and again.”