This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
20 years ago, most people got their news from TV, radio, newspapers and magazines. Today, the media landscape has shifted considerably. Whilst these media forms remain popular, more people are turning to social media for information – especially YouTube, Instagram and TikTok. These platforms have also seen the rise of “finfluencers”; self-professed financial “experts” who offer advice on personal finance, investing, day trading and, often, how to get rich quickly.
At Elmfield Financial Planning, we are not opposed to these platforms. However, we believe that nobody should be fed unhelpful advice or information about how to manage their money. In this article, we show how social media algorithms can often direct you to illegitimate content creators. We then offer some suggestions on how to protect yourself from bad social media advice. We hope you find this content useful. If you’d like to speak to an independent financial adviser then you can reach us via:
T: 01282 772938
Finfluencers and social algorithms
Have you noticed that when you visit YouTube, the list of videos on your screen varies from, say, that of a family member or friend? This is because the “algorithm” (computer system) behind the social network has gathered information about your interests and recommended a series of other videos which it thinks you might like. If you have watched videos on money such as those by Martin Lewis or by The Economist, for instance, then YouTube may suggest some videos by “finfluencers” for you to watch – i.e. individual content creators, often publishing alone from their home and with a large number of social media followers (or subscribers).
The problem, however, is that social platforms like YouTube still do not distinguish between content creators who are qualified to give financial advice, and those who are not. The Financial Conduct Authority (FCA) has warned social media platforms to take action on this front. Yet no meaningful regulation has been put into force. It is true that TikTok has now banned investment promotions (e.g. for foreign exchange and cryptocurrencies), and Google has recently required advertisers to declare their regulatory status before they can advertise on YouTube. However, it is still possible for viewers to find content creators giving bad financial advice on social media and consume their content on a regular basis.
Warning signs
We are all impressionable. So, how can you protect yourself from unhelpful content on social media? A good starting point is to simply ask yourself who the content creator is. Remember, you do not need to have financial qualifications or be FCA-regulated to set yourself up as a “finfluencer” on a platform like YouTube. Also, bear in mind that even if the presenter seems likable, popular or attractive this does not mean they are truly competent. Also, many content creators seem to be well-versed in financial jargon, but this does not mean they are qualified.
As a default, assume that a content creator is not truly trustworthy until they have proven that they are. Proof, moreover, means looking beyond his/her own content. For instance, what is their status in the investment world or wider financial advice industry? Do they have content published on other, authoritative platforms such as the Financial Times? Has their work been critically reviewed by other qualified people outside of the social network in question?
Also, be aware of “survivorship bias” on social media. Quite often, the most popular content creators on social media have reached their position – at least partly – due to investment luck. Those who have fallen out of favour with the masses are often those whose luck ran out (e.g. with a “hot investment”). Therefore, could it be that the content creator you are viewing reached their success due to other factors which you have not yet seen?
Social scams
Another problem plagues social media platforms which has not yet been fully resolved: scams. Many fraudsters like to target finfluencers’ channels because they have a large following, and so there is a higher chance of deceiving someone into parting with their money.
One publisher recently told about how their YouTube channel was banned (and later reinstated) because the algorithm regarded one of his comments as a scam. In the video, he explains how fraudsters often get around filters such as these by creating “impersonator” accounts, leaving comments on the content creator’s videos and inviting people to text/WhatsApp a phone number for investment advice.
The nature of these scams makes it difficult (if not impossible) for social platforms to fully eradicate them. Be especially careful, therefore, when viewing finance-related content on social media. Be very wary of contacting the individual using any information found in the “comments section”. Sadly, people do fall for such scams. One study by Action Fraud in 2019 showed 356 “get rich quick” schemes on Instagram had resulted in £3m lost by users.
Invitation
If you are interested in starting a conversation about your own financial plan or investments, then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Reach us via:
T: 01282 772938
