There are many financial advisers who have had their businesses affected by the pandemic, not least the ability to find clients in this technological age.
One area that Olivia Shipstone, director at St James’s Place (SJP) partner practice OCS Wealth Management, has turned to is the social media influencer market.
Influencers on Instagram and YouTube are starting to become some of the wealthiest people in the world.
The average influencer can reportedly earn $30,000 to $100,000 (£71,940, €82,480) per year by promoting products on their pages. For the users with more than one million followers on social media, they can make more than $100,000, or even up to $250,000, per sponsored post.
International Adviser spoke to Shipstone and Aurelia Butler-Ball, a senior associate in the media and entertainment unit at law firm Irwin Mitchell, about dealing with influencers as clients.
Without knowing the market, some people may hastily dismiss influencers as clients.
Shipstone said: “People aren’t taking them seriously. They do not understand the income that they can achieve and are achieving.
“You say you’re an instagrammer or an influencer, and people say ‘what’s your real job?’ It’s a career. They are serious and they’re really goal-driven.
“They are the kind of people you want to work with as well because they work alongside your planning. I do goal-based planning. It really helps me when they know where they want to be, I can help them achieve that.
“They’re also business owners, effectively. I’d say all of my influencer clients are self-employed.
“A lot of advisers focus on business owners. So, what’s different between a business owner who is an influencer with a social media business, as opposed to a business owner who sells a product that you buy in a shop?
“People don’t really grasp the concept of an influencer and disregard it.”
Ignorance surrounding influencers
Butler-Ball, who helps influencers with their legal issues, added: “There is definite almost ignorance in professional services around this type of work, and how lucrative it is.
“Gone are the days where people started a career or a business and just worked in it for 50 years, and they sell it or retire. Now, this is a young generation who have portfolio careers.
“At the moment, they’re focusing on being an influencer or working on their social media presence. Professional services providers might think ‘what’s the point that’s only going to last five years, they’re not worth it’.
“But what you don’t realise is that’s their focus at the moment, but these individuals are incredibly entrepreneurial.
“They’ll earn revenue in this space at the moment, then they will invest in another business, or go onto another bit of media.”
The influencer market has many similarities to the sportsperson client, a client segment that IA has written about on various occasions.
Their time in the limelight could last as long as 20 years or just a year, so they need their money to last and this is where an adviser can step in to help.
SJP’s Shipstone said: “It’s not too dissimilar to sports clients in the fact that it’s normally the younger generation.
“A lot of it is an education piece, understanding what I do as a job, and then also how we intertwine with the rest of their team. The first hurdle that I have with the younger generation is that a lot of people associate financial advisers with accountants. We do completely different jobs.
“It’s all about the long-term relationship. It’s all about them understanding how we can help, and that advice is for everyone, not just when they’ve hit a certain milestone, or they’ve got a certain deal.
“It’s about having those conversations early on, to make sure that when these things arise or when they start to think about how their career will impact their lifestyle, and their future.
“Their timescales are so unknown, which is the biggest factor with planning, so it’s all about adaptation and constantly checking in. We have annual reviews with the influencer space at least, but we do check in more frequently because it’s ever changing.”
The income of an influencer is rather volatile and will differ per person.
But there is an array of different revenue streams that influencers can earn money from in the social media world.
Butler-Ball said: “Influences earn revenue from advertising made through the platform. The platforms, such as YouTube and Instagram, share a percentage of revenue with the influencer.
“They get money from how many views the YouTube video gets, pre-roll ads, or a mid-roll advert, and depending on how many eyeballs they think are on those brands. Then they will get a share of the revenue YouTube are generating through advertisers wanting to advertise their brands.
“The other revenue stream is the deals that they do with the brands themselves. That is the in-video or in-post adverts talking about a particular product or a brand.
“For those deals the individuals are doing, they need a contract in place. That will set out what’s exactly required from the influencer. My job is to work with them negotiating, drafting, reviewing those contracts between them and the brands, which they’re advertising.
“The marketing budgets of brands now are increasingly being extended for use of pure influencer marketing because it is that powerful a tool for these brands to get people to buy.”
She added that these clients do need education around “the basics of intellectual property law to make sure they’re not taken advantage of”, which allows them to “properly value and exploit those rights that they’ve created”.
“Within those contracts with brands, they might unknowingly assign, licence or transfer the ownership of content to a third party,” Butler-Ball said.
Dealing with longevity
It may be difficult to financially help influencers once their 15 minutes of fame has disappeared.
But both Butler-Ball and Shipstone believe that these clients have the skills to adapt their businesses to make them a valuable customer.
Irwin Mitchell’s Butler-Ball added: “I don’t think any of the influencers I work with at the moment, have any delusions that they will be a 65-year-old influencer.
“They’ve seen that this, at the moment, is a total boom industry. It’s incredibly lucrative and they have found a way to exploit that. What we find with these individuals is that they are very entrepreneurial.”
Shipstone said: “I think with any career, you have transferable skills. They have those skills should they need to look for a different career path where maybe they might not be self-employed.
“For me, the goal is going back to cash flow and how their income is going to serve them.
“They might decide, if they’ve got sufficient planning in place, that they can fund a lifestyle for a large number of years, and they might not need to have the urgency to find something else.”
Some people might think that influencers are just a phase that will end, but they both believe that this a growth area.
Shipstone continued: “I think you’ve seen it grow over the last 10 years. Therefore, it’s going to have a knock-on effect which means that more professionals in various areas – eg financial advisers – will interact with these people.
“They will not necessarily seek out those opportunities, but just fall into them. I think one way or another, eventually your path will cross with these areas and creators.
“A lot of lot of my clients are referrals from current clients, and therefore if you just start with one, it’s a domino effect of being that trusted person in the industry that understands it. It’s about building those connections and teams that you can work with. I think a lot of professionals will, over time, have those interactions with these individuals.”
Butler-Ball added: “The power of influencer marketing is unique and growing. I think covid has shown us above everything that people just want more content, they’re spending more time on their phones and on computers, influencers are just able to cut through all the noise and engage huge audiences to go and buy products.
“It’s an industry which is growing at a colossal rate. The new revenue streams that have been generated by people on these platforms are just ever growing. It’s huge what can go on in this space and I think we’re only at the beginning.”