I must confess to having been rather negative about the so-called social media influencers or ‘finfluencers’ as some call them.
At best they have appeared to be irritating amateurs passing on worthless advice or at worst crooks peddling get-rich quick schemes or bogus crypto investments via online videos and social media.
That would some up my views in the past, and the view of many planners too I suspect, but is it time for a re-evaluation?
A new survey by communications firm MRM and the Mouth Money financial bloggers, suggests that millions of young people aged 18-29, two in three of them apparently, take advice and tips from ‘finfluencers.’
They love financial videos and online tips and advice, the survey suggests.
So what’s the reality? Is my prejudice and the prejudice of many planners agains the YouTube gurus and the social media warriors really correct?
I had a look at YouTube and typed in ‘financial planning’ into the search window. I expected a lot of dross but what did I find? Actually quite a lot of useful info from some good sources. The top result was about the highly respected Carl Richard’s ‘One Page Financial Plan’. There was quite a bit from banks, US Financial Planners and even a UK Chartered Financial Planner. Quite US dominated but not unhelpful, all the same.
However, type in ‘investing’ and you start to get more of a bit of a mixed picture. Plenty of good stuff about people like Warren Buffett but also some stuff about money-making ’side hustles’ and some ads starting to appear about crypto investing and other get rich quick schemes. Pretty soon you are into a picture of people flogging online courses on to become filthy rich working one hour a week.
What comes over is that it’s all a bit of jumble, some genuinely good advice and some appallingly unrealistic promotion of get rich quick investments or schemes.
It was good to see a number of Financial Planners using YouTube and other social media to spread the word about the benefits of balanced, cautious Financial Planning but they are often hard to find and discovering them depends on YouTube and Google’s algorithms.
There is no doubt that FCA pressure on Google (YouTube’s parent) and other search engines and social media has improved things over the past two years. Some of the worst scammers have been chased away but you are never far away from some bad advice and losing your shirt.
With all this in mind, the question is what’s next? The MRM / Mouth Money survey makes the good point that whatever people think, young people like watching videos on money, budgeting and personal finance. Social media, YouTube and the like have also been responsible for energising young people to become interested in personal finance.
Who wants to read a 300 page book about retirement planning when you can watch a colourful, 10 minute video with some clever animation on YouTube? I’ve no doubt many young people were simply browsing through YouTube too when they stumbled across a financial or investing video that caught their imagination and then went on to open an equity ISA. It’s clear that some new, younger investors start their journey on YouTube.
The survey also suggests that much of the new interest from young people in investing generated during the pandemic was encouraged by YouTube videos and social media. They may well be right.
It is sensible now to accept that online videos and social media posts are often the first stage of learning about personal finance for young people and that they can be helpful. The solution to all the inherent risks is to improve regulation and encourage YouTube to make clearer what the qualifications and experience are of the ‘finfluencers.’
Better regulation of the sector and clearer labelling of what is sponsored content or advertising and what is simply a helpful and qualified Financial Planner or IFA offering some free tips and advice to get people started is essential if consumers are to gauge who they can trust and who needs to be treated with more caution.
• To continue to access stories on Financial Planning Today please register for the site. You can also upgrade to receive our popular Financial Planning Today magazine in digital or print format (or both). Registering is free.
Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Follow @FPT_Kevin