Social media: the latest era of financial advice
Fresh off the back of the reddit – Gamestop story comes a Financial Conduct Authority (FCA) warning about risky advice being given on social media platforms such as TikTok, with videos encouraging users to buy shares in companies such as Blackberry and Gamestop itself.
Social media isn’t just about food pics and friend connections anymore. It’s home to influencers of all different kinds who have followers in the millions.
TikTok has 800 million users worldwide and an investigation by the BBC showed that some videos offering so called financial advice had been watched nearly 17 million times.
Much of this content doesn’t contain the appropriate risk warnings and the FCA have stated publicly they hope the government will consider financial harm as part of their online safety bill which is due to launch in 2021. Although the majority of coverage around this has focused on TikTok it’s worth mentioning that other platforms such as Facebook and Instagram aren’t exempt!
Why should you care?
You might be sat there thinking you don’t even use TikTok, maybe you’ve never even heard of it! But we bet someone in your life is signed up. There’s lots of different reasons why the rise of so called ‘fast-food’ financial advice is dangerous:
1. It attracts media attention. As we’ve spoken about many times before, the more you see something alarming about investing featured on the news, the easier it is to become concerned about your own set up. This can lead to panic fuelled decision making that’s detrimental to your long-term goals.
2. It could affect your loved ones. It’s not necessarily true that these platforms are only used by younger people, their personal wealth is just as important of course but the videos created make their way on to other social sites such as Facebook which has a 1.69 billion users, 52% of which are over the age of 35. The further these messages spread, the more destruction they can cause to personal wealth throughout all generations.
3. We want to move forward when it comes to financial advice. The get rich quick mantra is not what we’re about. We don’t want people to fall into this trap and as with many other social media trends it can be easy to get sucked in. The industry needs to be making positive moves to become more transparent and helpful rather than causing people distress and creating further negative feelings when it comes to professionals who are offering sound financial advice.
The advice gap
As is often the case with advice there is the issue of the advice gap. It’s one thing to want to take risks with your money but does this fit in with your long-term plan and the goals you want to achieve? Without looking at everything as a whole it’s unlikely making decisions in isolation, and without professional advice, will support your future financial freedom.
What should I do now?
As home trading has become more and more popular since the global pandemic began, don’t let yourself or your loved ones get influenced by the latest online advice – talk to someone who can take everything into consideration to ensure your decisions are backed up by education and evidence.
If you have any concerns or feel unsettled about advice you’ve seen online get in touch with your usual CPW team member or book a no obligation call by clicking here.
BBC – FCA warnings over ‘risky’ TikTok trading tips
Social Films 2020