World Wealth Report 2014: Can Social Media Help Close the Trust Gap?

The 2013 CFA Institute & Edelman Investor Trust Studyfound that trust in the investment profession is fragile — and that a lot needs to be done to improve trust, especially among individual investors. Enter the 2014 World Wealth Report from Capgemini and RBC Wealth Management, which suggests social media as a solution. While levels of trust and confidence among wealthy investors are on the rise, the report contends, “firms are aware they must work for it everyday. Social media offers the opportunity to reinforce trust by providing a platform for open, meaningful dialogue, which is capable of also driving business.”

The authors of the report note that interest among high-net-worth individuals (HNWI) over the age of 40 in emerging digital channels such as mobile applications, video, and social media remains tepid — but that this low level of interest masks “the very strong acceptance of those channels by HNWI under 40.”

For example, 47.7% of HNWI under 40 see mobile applications as important for conducting transactions, compared with 22.5% of those over 40, and 40% view social media as an effective tool for gathering information versus only 18.9% of over-40s. In addition, 40.9% of under-40 HNWI see video as important for engagement, compared with only 24% of over-40s.

According to the report, several key catalysts will “cause an increase in the importance of social media well beyond the current level.” These include:

  • Demographics: The report’s authors believe this may be the most important driver, given the growing prominence of wealthy investors under the age of 40, and the fact that this is a “tech-savvy group that is far more open to using social media than older generations. Among under-40 HNWI, 40.5% cite social media as important for accessing information, 36.3% for engaging with wealth managers and firms, and 33.5% for executing transactions.”

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