Greenwich Associates: Social Media Influences Investment Decisions

Apr 18 2015 | 12:49am ET

New research from Greenwich Associates has confirmed something most in the alternative asset industry already knew – social media is used at work.

Almost 80% of institutional investors frequently use social media platforms, according to Greenwich’s research, with approximately 30% of them also confirming that the information obtained from social media channels has played a role in their investment decisions.

Greenwich notes that since these investment decisions concern the placement of billions of dollars, it is incumbent on asset managers to develop effective social media strategies.

The research, published in a reported titled “Institutional Investing in the Digital Age: How Social Media Informs and Shapes the Investing Process”, consisted of 256 interviews of institutional investors between November and December 2014, with participants including public and private pensions, insurance companies, and foundations and endowments in the United States, Europe and Asia. 

AUM varied in size from under $250 million in assets to over $10 billion. Interview topics ranged from their overall use of digital and social media platforms to what role they may have in the their selection process of fund managers.

48% of the investors said information from social media prompted them to do additional research on an industry issue or topic. Meanwhile, 34% said information learned on social media influenced a decision to work with a particular client or company.

“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 and author of the study. “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.”

The leading social media platform used by the respondents is professional network LinkedIn. More than half of the investors said LinkedIn is the preferred source for professional use, with 85% of those investors that use the platform are doing so at least weekly. 

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