Social Media in the financial industry: Is it a credible source of financial advice?
Andrey Dashin is the founder of ForexTime Ltd (FXTM), Chairman of the Board of Directors and shareholder of the Alpari brand. He shares his views on the skepticism surrounding the use of Social Media in the financial industry and tells us how he thinks Social Media can be exploited to its fullest.
In any established corporation nowadays, Social Media and online marketing go hand in hand. Social Media is an integral component of a company’s online marketing strategy and a key gateway to its clients. Over the past few years it has had a tremendous impact on all kinds of businesses, including those in the financial industry. Social Media channels should be used with caution however, because misuse or manipulation can be detrimental to a company.
It is well known that Social Media channels, primarily Facebook and Twitter, are widely used in the financial industry, and forex businesses are no exception. Forex companies use such Social Media channels to generate business exposure, create branding, build a loyal fan base and communicate the corporate image. Companies can communicate their latest offers and campaigns, share information that they think would be interesting to their clients and use Social Media as a platform to deliver the company philosophy and ethos in general. Furthermore, Social Media is possibly the most ideal way to take a more fun angle on things, as it facilitates conversation by encouraging clients to share opinions or give feedback on products and services. It also secures an aspect which is key to businesses and often overlooked, and that is the personal touch that most clients seek in order to develop trust in and loyalty to a company.
In an industry like forex, where risk is a prominent element, using Social Media as a form of financial advice is not recommended. This is the kind of misuse I was referring to earlier on and it is exactly where Social Media can become dangerous. The April 23rd Hash Crash revealed that hackers can affect the markets severely by posting confusing information on Social Media. And these kinds of incidents have taken quite a toll on the way investment and trading firms use Social Media channels. But hackers are not the only reason why Social Media should not be used for investment advice – the fact remains that Social Media was intended for other reasons and to achieve other purposes and there shouldn’t be a blur between the different components of a company. Financial opinions should be left to the experts and Social Media should be used to achieve the goals mentioned earlier on. The financial sector is a serious sector which revolves around making key decisions which affect one’s personal wealth, so regardless of how significant Social Media has become in modern day marketing, it should not be abused. It remains however absolutely imperative in terms of reaching out to clients, responding to their needs, being part of discussions, promoting products and campaigns and establishing as strong an online identity as possible. In addition, it enables employees from different departments in a company to keep track of the developments across the company and remain connected.
Despite the growing skepticism in the industry around the credibility and usefulness of Social Media, I continue to believe that companies in the financial sector can and should continue to exploit it to its fullest potential – if used correctly, it can be infinitely beneficial.
Note: The content in this article comprises personal opinions and ideas and should not be taken or misunderstood as investment advice.