A recent Bloomberg News report that appeared in INN offered the idea that individuals who are making millions and billions in social media are prime client material for investment houses and independent financial advisers.
On its surface the idea seems obvious. After all, as the above-cited article points out, their companies are being acquired or prepped for initial public offerings, thus they are about to become very rich. Certainly the cash is or will be there, yet I’m not so sure that these individuals—or the social media sites they have created—are themselves a good risk.
Consider that many, if not most, of these folks are young, flush with cash and perhaps a bit impulsive. They’re just as likely to pull huge chunks of money out of their brokerage accounts to fund some other new and exciting product as they are to allow their wealth to grow in those accounts. Of course, a broker runs that risk with any client, but perhaps more so with a younger, more risk-friendly demographic.
Consider also that social media are, as I have noted here previously, a prime target for organized cybercrime. In a recent Web seminar from security vendor Sophos, Graham Cluley, senior technology consultant, pointed out that social networking attacks are continuing to grow, for one reason because the accounts themselves have monetary value. Any social networking account, once accessed, can be used to send spam, spread malware, steal identities and commit other crimes.
“Social networks are immature in terms of protection,” said Cluley. “There is probably more that they could do about it [in terms of security]—if they wanted to.” He added that in 2010, 67% of social network users were hit by spam, and 40% by malware.
Given the high risk of social networking as a business, a financial planner or broker might well think twice about the stability of any client who makes his or her money in this very unstable environment. Security experts are telling us that this situation is growing worse, not better.
Unquestionably, the potential rewards of social networking moguls opening accounts are huge. Then again, the risk is also considerable. For those who take on such accounts, the decision boils down to a single question (courtesy of Clint Eastwood as Dirty Harry): “Do you feel lucky?” \
Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.
Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at firstname.lastname@example.org.
This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access