Role of Social Media in Investment Decision Making

Role of Social Media in Investment Decision Making
  • Opening Intro -

    It can be a challenging task to manage an investment portfolio on your own without seeking help from a financial advisor.

    Social Media can be the best option in Investment Decision Making.


The Internet is nothing if not an exercise in interconnection.” –  The Economist

According to Experts, social networking is being adopted as quickly as the population of the particular region connected via the Internet. Developing Markets are going “Straight to Social”. People are adopting Social Networking Quickly as they come online. In particular, developing countries such as India and China are experiencing a major growth in social networking and people of these countries are willing to change their lifestyle to access the Internet.

What is so special about Social Media?

Social Media or Social Networking has a transformative role in connecting people worldwide. There are distinctive differences between Social Media and Traditional Media. Traditional Media is one sided, Planned, Product Driven, and Seek audience response. While Social Media is two sided, Issue Driven, Guided, and has Peer to Peer response. The interactive elements of social media are instrumental to its engagement property, and empowering participants. One of the most critical functions of Facebook is Social transformation. Average facebook users have 120 friends and younger users tend to have more. You may find that your network of people on social media sites is quite broader. In fact, a post from a person on social networking sites can influence your decision making through their positive and negative feedback.

Investors and Social Media

Social Media is playing an important role in decision making process of Individual investors, especially for those that can be considered high net worth individuals. Almost two thirds of high net worth investors believe that online groups and peers are generating information that has an influence over their purchasing decisions and behaviors. Many high net worth investors are not relying on the official sources of information. Instead of trusting factual data, investors are questioning it and relying on the advice presented in social networks.

Social Media may provide emotional support in the form of positive feedback on financial decisions. Investors are relying on a social media and reducing their reliance on data from official sources.

It is found that almost 70 % of investors using social media platforms at work, and approximately 25 % investors confirmed that information obtained via social media affects their investment decision process. Social Media may help you to know more about an advisor through client reviews. This can give you a more insight how advisor works and whether their approach appeals to you.

The survey showed that receiving timely industry updates and news was the most common reason to use social media. Around 45 % investors seeking educational contents relating to investments which can helps in making their investment decision right. Investors are using social media platforms to research asset managers, which is ultimately helpful recommendation for investment products.

Top Purposes for Using Social Media Cited by Investors

  • Timely market updates and news.
  • Learn about investment opportunities and products detail.
  • Group Discussion about investment products and services.
  • To connect with other institutional investors.
  • Seek recommendation of investment products and services.  

Moreover, study found that Investors with over $5 million in investable capital are personally more active in their investments, and are therefore more interested to use social media as a research tool in their decision making process.

I present ideas to empower companies to make evolutionary leaps in their go to market strategies and helps entrepreneurs catapult their small business into the 21st century by utilizing these business strategies on Fourquadrant. A free spirit, residing in Salt Lake City, Utah., I have been a writer since 5 years with over 500 published articles.



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