Won’t the real influencers please stand up
Bathroom ideas? TikTok. Design tips? Pinterest. Financial advice – that’s a no-brainer …
For circa half of UK Millennials and Gen Zs, finfluencer sway is growing.
A new study from the Financial Services Compensation Scheme found that almost two-thirds (64%) of UK adults with savings, investments or a mortgage haven’t sought regulated financial advice in at least five years.
And it’s pretty simple really: why pay for good financial advice when you can get it for free on Instagram? So say 44% of Gen Z adults and 60% of UK Millennials, anyway.
Forbes Advisor says Reddit, YouTube, TikTok, Instagram and Twitter are now the top five go-to platforms for under-40s seeking financial advice. Professional services be damned.
Humphrey and Keith
Let’s compare and contrast.
The world’s top finfluencer, in pure numbers, is probably Humphrey Yang. He’s a chiselled, mid-thirties San Fran entrepreneur with Hollywood teeth and kind eyes. He’s active everywhere – from YouTube to Insta, TikTok, Facebook and in his weekly Substack mailers.
What’s extra appealing about our Humphrey is his work with non-profit organisations and his regular messages deriding the wealth gap. The icing on the cake is that Humphrey has been known to pound the pavement handing wads of cash to total strangers.
Ah Humphrey. He’s the full package. He’s A-List: attractive, alluring, accessible, altruistic. He speaks plain English and he’s free. Humphrey is light years from the stereotype of the professional financial advisor who is (forgive me) sullen, expensive and grey. He’s Keith.
Keith can’t compete with Humphrey. Keith probably doesn’t want to. Keith isn’t public. Keith isn’t accessible. Keith is out to lunch. Keith can’t see why he’d ever broadcast knowledge, tips or trade secrets for fun and for free on social media …
So. Ask a Gen Z to pick and it’s Humphrey twice on Sundays.
Is this a problem?
It is on various levels. Although Humphrey’s tips largely concern the American market and system, finfluencers like him have, in the UK and elsewhere, been able to exploit what’s called ‘the advice gap’.
This name is kind of a shorthand separating those who can afford professional financial advice (which is pricey) from those who can’t, won’t or don’t.
On face value it might seem that finfluencers carry out a worthy public service for those who can’t, won’t or don’t … but not all finfluencers are good eggs. Not all advice is above-board, and not everyone’s as legit or selfless as they claim to be.
Plenty of irresponsible influencing and scams take place on social media and it’s becoming increasingly difficult to separate the good from the bad and the ugly.
When scams or significant losses occur following regulated advice there’s a whole system in place to protect the victim but these safety nets barely (if ever) exist in finfluencer land.
Roots and branches
The UK FCA has long been worried about spurious finfluencers and measures are unfolding as we speak to blunt the potential for financial harm.
For example, crypto incentive schemes are being banned in the UK, and demands are increasing for Big Tech to ensure only financial promotions backed by an FCA-authorised firm actually make it into the public domain.
But these are containment measures to hack off a few bad limbs when solving the problem is much more root than branch. There have been rallying cries for professional financial advisers to step up activity on social media for a decade yet only now (thanks in large part to TikTok) are regulated influencers beginning to answer the call.
This may bring more balance to the social media airwaves but even so, a key reason people reach for finfluencer guidance in the first place is nothing to do with shiny content, teeth and creativity.
Under the advice gap is an education gap that’s at the root of the problem.
Influencing online and off
Research from the UK Financial Capability Strategy finds that just four in 10 young people say they had some financial education at school. And while this is better than a generation ago (it was nearer 1 in 10), it creates a space almost anyone can move into.
So as long as upskilling and education in money matters is a DIY endeavour, we’ll stay stuck. Until there’s a system change we need professional influencers to step up so new generations can level up.
If you have pro money skills then why not help the people you know, or start a podcast, or give a talk in the local school. Because as much as the world loves Humphrey, not all finfluencers are like him. And we reckon even Humphrey would agree: a world that doesn’t need him is a better place to be.