A study by global asset manager American Century Investments showed that the more advisors use social media, the more value they receive from it. However, a surprising number of advisors don't use social media on a consistent basis, and many view it as not having a large effect on their business, either now or in the future.

For the eighth time, American Century surveyed 301 financial advisors in both wire houses and independent broker-dealers and registered investment advisors (RIAs) to investigate usage, feelings toward and benefits gained from using social media for business purposes.

The number of advisors using social media for business purposes has increased dramatically since the study began in 2010, according to Diane Gallagher, vice president of Client Marketing for American Century.

"We found that 57 percent of advisors now use social media in their practice, versus only 25 percent in 2010," Gallagher said. "Furthermore, 63 percent of advisors now have a social media program at their company, up from 53 percent in 2011. This says to us the industry has come a long way."

The research revealed additional notable findings:

• Significant differences exist between financial advisors and RIAs in terms of usage, perception and business value gained from social media.

• Advisors with five to 20 years of experience are using social media most effectively, versus newer advisors or those who are more senior.

• Companies that have a social media program in place have seen significantly more usage and bottom-line impact than companies without a program.

• Companies that provide more advanced training for their advisors see a greater business impact than those that provide only basic training.

• Many advisors – even those who have seen business benefits from it – still do not believe social media is a valuable tool.

Financial Advisors Use More Social Media Than RIAs

Financial advisors use social media more frequently and feel it is more valuable than do RIAs, according to the research. Roughly half of the advisors surveyed use social media for business purposes on a daily or weekly basis, compared to only 21 percent of RIAs. Additionally, most RIAs do not use social media for business purposes at all, in contrast with 66 percent of financial advisors who are using social media for business purposes. Some 62 percent of financial advisors have scheduled a meeting in the past year as a result of social media versus 35 percent of RIAs. Nearly one in five financial advisors have scheduled more than 10 meetings in the past year from social media, compared to only one in 20 RIAs.

Younger Doesn't Mean Savvier

Although some might assume that longer-tenured advisors use social media for business purposes infrequently and that younger advisors are more tech savvy and thus use it more frequently in their business practice, that's not necessarily the case, said Gallagher.

"Medium-tenured advisors who have between five and 20 years of experience are using social media more and seeing more benefits as a result than other advisors with less or more experience," she said.

The study revealed that 85 percent of advisors with five to 20 years of experience use social media for business purposes, while only 44 percent of other advisors use it in their work. Also, four out of five advisors with five to 20 years of experience have scheduled at least one meeting in the past year via social media, while only two in five with less experience and more than 20 years of experience have done so. Consequently, almost four in five medium-tenured advisors have increased their assets under management in the past year by using social media, while only two of five other advisors have.

"We wonder if perhaps new advisors are comfortable using social media in their personal life but are either uncomfortable or haven't been trained in its use at their firms," Gallagher said.

Programs Lead to Success

Most study participants said their company had a social media program, but a majority of advisors stated they do not receive social media training from their company. Furthermore, if advisors have a social media program at their firm, almost 60 percent of those advisors use social media daily or weekly, but only eight percent of those without a program used it daily or weekly. Also, 84 percent of advisors follow up when others engage with their content when a social media program is in place, but only 26 percent of advisors do so when no program exists.

"The key to successful advisors on social media platforms is the importance to the firm," Gallagher said. "For example, if a firm has a formal social media program in place with specific guidelines, advisors are much more likely to use social media for business purposes on a regular basis."

Advanced Training Offers Greater Impact

The research found that advisors who received advanced social media training saw a greater business value than advisors with basic training. Advisors with more in-depth training used social media more frequently; over half with advanced training used it daily. Also, advisors with advanced training were able to get in front of key decision-makers using social media that they otherwise could not at a much higher rate than with basic training alone.

Some 92 percent of advisors with advanced training felt participating in their company's social media program was a good use of their time versus 53 percent of advisors with only basic training.

"Simply put, the more firms train their teams, the more value they receive," Gallagher said.

Is Social Media Valuable?

Although many advisors are using social media, a number still struggle with basic sales activities using social media, according to the research. Only three in eight study participants feel they know how to write searches to easily find their target audience or centers of influence on social media, and 28 percent of advisors don't try to find their target audience. Slightly over half of advisors said their invitation to connect on LinkedIn were accepted half of the time or more.

Advisors also still struggle to see social media as valuable. In 2010, only 21 percent felt it was of high value to their business success; this year, 33 percent felt it was valuable, but 38 percent said it never will affect their business success.

A large number of advisors – 41 percent – are reluctant to use social media for business because they might make a mistake.

"Advisors are missing opportunities due to a number of factors such as a lack of training, a lack of priority at their firm, fear of making a mistake, compliance guidelines, or simply not believing that social media has value," Gallagher said.