Turning to social media for financial advice: Experts warn of risks
15 Nov 2021
The results of a recent survey have revealed one in 10 people under 25 years of age are turning to social media for financial advice from ‘influencers’, with just 3% of people within this age range using paid financial advice. With more and more people therefore at risk of falling for financial misinformation and scams, experts are warning people to be on guard.
The research from financial advice service OpenMoney showed an increasing number of young people are choosing to take financial advice from people claiming to be experts on social media sites including Facebook and Twitter. OpenMoney’s YouGov poll of 2,000 adults in the UK found the most popular source of receiving financial advice across every age group was personal research on product provider websites. As such, money experts are warning of the risks associated with people alleging to be finance experts online, and caution that social media sites’ spreading of misinformation remains a grey area in regard to regulation. Anthony Morrow, Co-Founder of OpenMoney, told the Daily Express: “I really believe that most people should not be investing in high-risk products. The FCA, which regulates financial products, has some rules in place to protect people with average and lower earnings from investing in sophisticated products. But these need to go further so investors can not be easily lured into financial scams or tempted by promises of high returns without fully understanding the risks involved.”
Social media sites should step up
The OpenMoney co-founder believes social media sites should ensure that influencers on their sites are not promoting misinformation or financial products: “Some platforms have made a start by banning branded financial services content or making sure investment content is only from regulated firms, but far more can be done to identify and remove posts that promote high-risk investments.”
The demand is there
Looking at the number of followers of social media financial influencers on platforms such as Instagram and TikTok, there is indeed a demand for investment information. Morrow added that fully qualified, regulated financial advisers should be looking to reach a larger audience via social media and stress the importance of “money management” and “long-term investing through simple, low-cost products.”
Of course, it’s easy to be influenced by self-professed experts with little or no experience or qualifications on social media – without even recognising it. Make sure you obtain information from someone who is suitably qualified, and you fully understand and are comfortable with the risk level you are taking.