There is no doubt that in the last decade social medial has completely changed how we consume content. It is somewhat of an unavoidable juggernaut. What started initially as photos and socialising has transitioned to direct advertising and news consumption on a massive scale. According to a 2023 Ofcom report 47% of UK adults are using social media for news nowadays. This is particularly prevalent in young adults (16-24) where 71% are using social media platforms to see the news.
As there is an increase in numbers of users on these platforms so too is there an increase in people vying for their attention. The term influencer has seemingly come from nowhere but is used to describe a person with a prominent internet presence and a platform (following) that they can use to guide (or sway) their followers to certain products or services. Within this umbrella are Financial Influencers who are also referred to as ‘Finfluencers’
Are they cause for concern?
As with everything each case can be judged differently, CapitalOne have done research into this and currently only 13.7% of people admitted to getting financial guidance from a social media influencer. That seems a low number but it equates to 5.4 million people.
The key here is that finance is such a technical topic within a heavily regulated industry (for the protection of the consumer) however social media accounts are currently unregulated. The same study also finds that 74% who took advice from social media actually ended up having a negative outcome, this is even more prominent in young men where 80% of males revealed they have fallen victim to online guidance.
80% of financial advice on Youtube is given by someone with no qualifications. This is an alarming statistic, just 9% of videos regarding savings are made by someone with financial qualifications. For the average consumer savings is going to be one of the more popular focal points of their financial plan and this results in 81% of people online getting unregulated savings advice.
What to look out for on social media?
There are a few quick ways to verify what you are watching or reading:
- Is there any disclaimer at the start of the video, or does the person verify their credentials?
- Are they offering guidance or advice because there is a key difference?
- Can you cross reference what you are seeing elsewhere?
- Is the video being sponsored?
- What content are my children watching (Young adults are much more susceptible)
- Does it seem too good to be true?
Regulated financial advice
There is a reason regulations are in place and you should seek professional advice where possible. If you are using social media to look for financial advice or answers to questions then be wary of where you get that information from.
As an independent advice firm we are able to offer whole of market regulated advice involving a wide range of services (such as pensions, investments, estate planning). We offer a free initial consultation so feel free to get in touch.