TikTok and Instagram have become increasingly popular when it comes to millennials and Gen Z’ers and the growing interest in money management. While some may say young people showing a greater interest in their financial wellbeing is a good thing, it’s important to question whether this is the right channel to get your information. Financial influencers known as ‘finfluencers,’ have varying degrees of knowledge, yet most do not hold an Australian Financial Services Licence which means they aren’t subject to codes and regulations to act honestly, efficiently, and fairly or to have capital buffers set aside in case of investor loss. In this piece, we explore the rise of finfluencers and the impact they can have on their followers.
Friend or foe?
Traditionally, young people have had limited access to personalised financial advice as advisors can often charge hundreds if not thousands for their services.
Social media, on the other hand, is accessible regardless of your financial circumstance. But there is a lot more to consider when it comes to acting on financial recommendations from people you don’t know on Instagram and TikTok.
Like most influencers, some of these finfluencers have a vested interest in the content and advice they’re sharing. They may have paid partnerships and personally benefit from any action taken on the knowledge that they’re sharing. Additionally, some of these people have no qualifications or meaningful experience within personal finance and money management beyond their own situation. Financial influencers aren’t the first group to face scrutiny for sharing advice on social media.
The new ‘Health and Wellness’ influencer
‘Health and wellness’ influencers have been causing concern for years. Many health and wellness influencers, sometimes referred to as fitspo influencers, have been accused of sharing uneducated and inaccurate information that has led to harmful ramifications like the notorious Belle Gibson.
Gibson built a following on Instagram before securing a lucrative deal with Apple. Along the way, she tried to share that she had treated her cancer with a healthy diet and lifestyle which caused some of her cancer suffering followers to change the way they treated their own cancer.
While often well-intentioned, wellness influencers sharing simple messages like ‘a day on a plate’ with an impressionable young audience and limited context has the potential to cause harm.
According to The Healthy Eating Clinic, ‘Constant exposure to unreliable nutrition advice from influencers has been a key driver of the increased rates of Orthorexia and Body Dysmorphia, both of which correspond with increased social media use.
There’s also a commercial side to consider. The health and wellness industry is a thriving space for paid collaborations. Some may question how impartial someone can genuinely be where there is potential money at stake which means in some instances, influencers are putting their own hip pocket before the wellbeing of their potentially young and impressionable followers.
This industry has demonstrated that the ‘influence’ these individuals can have is substantial. So, when we look at how finfluencers might advise or direct their followers, there is a cause for concern, particularly when these individuals may be benefiting financially through paid collaborations and affiliate deals.
In contrast, registered finance professionals have typically undertaken tertiary study and have established careers within the industry based on their experience. Financial influencers often don’t have the experience or even the qualifications to guide people on what’s best for them.
What to look out for
While there are some financial influencers who may provide questionable information, not all are bad. Some may provide genuinely helpful information. So, how do you determine which accounts are sharing quality information?
- Review how transparent the account is. Do they list any qualifications? Do they have an Australian Financial Services Licence? Do they list partnerships or collaborations they may be financially benefiting from?
- Be wary of their popularity on a social platform. The number of views and followers one may have does not necessarily attribute to success or even the best advice. Consider the context and always undertake your own research before acting on social media content alone.
- Understand that the content will nearly always be general in nature. An influencer cannot know your personal financial circumstances which means the content they’re sharing may not be relevant or helpful for you.
- Get rich quick schemes are often just that – schemes. Scammers do use Instagram and tend to promise high returns within hours of investing which is almost impossible. Pump and dump schemes involve artificially inflating the price of an owned stock through false and misleading statements to sell cheaply purchased stock at a higher price. These schemes are popular in the US and are also becoming more common in Australia so it’s something to be aware of.
If not social media, where?
Excitingly, interest in financial health has risen significantly in millennials and Gen Z’ers which is demonstrated in the abundance and success of finfluencers, finance podcasts and micro investing apps. The youth of today are lapping up information whenever and wherever they can to increase their financial literacy and get ahead in terms of their financial future.
Thankfully, social media is one of many places that people can go to increase their knowledge. Podcasts are another great, often free, platform that some accredited finance professionals are using to disseminate information. Some of our favourites:
- The Numbers Game – A podcast by our very own Nick Reilly and Marty Vidakovic in partnership with Future Advisory’s Jason Robinson. The boys come together to bring you strategy and advice around the importance of knowing your numbers in life and business. Numbers really do tell a story so let us help you make it a good one.
- She’s on the money – Hosted by financial advisor Victoria Devine, which aims to share episodes that take the fear out of finance and help women master their money.
- The Pineapple Project – An ABC podcast with a new host for each season. They cover a range of topics including work, death and living pay check to pay check, all in relation to your finances.
There is also a range of free, and not for profit organisations around Australia that may be able to provide support. The Australian website, moneysmart.gov.au shares a number of credible resources here to review.
Lastly, it’s also worth speaking with a financial planner. They may not be as expensive as you might think.
While ‘finfluencers’ may provide social media content that’s both helpful and relatable, it’s important to closely consider whether the person behind the account is benefitting from the content. It’s also essential that you undertake your own research and ensure that any decision you make related to what you have seen on social media, has been thoroughly thought out.