Traditionally, financial advice has been a face-to-face activity, but the millennial generation – those born between the mid 1980s and the early 2000s – is used to manage many aspects of their lives online and on social media.
Financial advisers are increasingly keen to make their presence felt on social platforms, but this is just the start. There’s a strong likelihood that the social media giants could themselves turn to offering financial advice in the future.
The millennial effect
As millennials age, they’re likely to see their earnings and savings rise and that means they’ll become a bigger part of the financial advice market. With trust in traditional banks and finance companies declining, this opens the way for online disruptor businesses and social media companies to step into the gap.
Facebook offers users the ability to make payments, so adding financial adviser software would seem to be a logical next step. Intelligent platforms are able to integrate with the existing systems of a business and allow the automation of advice, which would tie in well with social sites.
The problem with all of this is likely to be one of trust, which may prevent automated advice and sites that don’t have finance as their core business from taking a significant share of the market. While the reputation of existing financial institutions may have suffered in recent years, it’s questionable whether social media platforms are trusted to a high enough extent.
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Facebook,, has already come under fire for its advertising policies and for selling information about individuals’ browsing histories to advertisers.
Facebook isn’t the only game in town, however, and other social sites may have more scope to make headway in offering financial advice. Professional network site LinkedIn, for example, is another player that could look to develop into this arena.
A further issue is how much people actually trust advice offered by robot platforms. At the moment, these account for only a small proportion of managed assets. However, as the use of advice software grows and people see how well it performs against the market, they are more likely to trust its ability to make good decisions.