I think many of us dismiss the role that social media influencers play in shaping financial behaviour. We are focussed on the role of financial education, provider comms, and advice and guidance in supporting people. But finfluencers are responsible for much of the financial information received by today’s under-30-year-olds; and these people are tomorrow’s over 30s and 40-50-year-olds.
Finfluencers have a significant impact on financial attitudes and behaviour for both the financially capable and non-capable, though higher levels of financial literacy moderates decision-making and helps prevent blindly following advice. Finfluencers demystify complex financial systems, making financial management more accessible and relevant. Crucially, they add that personal touch, reflecting young people back to themselves through shared lifestyles and attitudes. 38% of Gen-Z investors say social media had a significant impact on their decision to invest.
I don’t think the rise of the finfluencers is in itself a bad thing – they are reaching people who traditionally struggle with making informed active financial decisions. And whether we like it or not, young people are demonstrating that this is how they wish to receive financial information. 62% of 18–29-year-olds follow social media influencers. So, we need to accept, work, and grow with social media if we are to stay relevant.
But as with any new trend, there are risks and bad actors. Some finfluencers are paid to sell products, which is not disclosed, and others reccomend risky schemes or investing in crypto currencies – not in itself a bad thing, but fraught with risk that inexperienced investors may not understand. Essentially, many finfluencers are delivering regulated services without being regulated by the Financial Conduct Authority or disclosing commercial relationships.
The regulator is attempting to crack down on bad behaviour, but as social media is a relatively new financial advice platform, the Government has not yet solved the issue of how to enforce platforms to stop unregulated actors from delivering advice.
I’m taking two lessons from this emerging trend:
- Finfluencers are here to stay, and while risky, can engage the hard to reach. Industry needs to harness and grow with this platform if it is to stay relevant – and there are some great educational opportunities!
- Regulation needs to catch up quickly (not an easy ask I know) and cross-jurisdictional collaboration may be necessary if we are to make social media a safe place to receive financial advice and information.
All this has me wondering if I should go on TikTok. But I have been told that pensions policy is still a bit niche for the platform… at least at the moment. We might all be on there, or its equivalent, in ten years…
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