New research by Skipton Building Society shows that a shocking 18.6 million UK adults trust the financial advice shared on TikTok, Instagram and Facebook despite not knowing where it has come from.
The numbers are especially high in the 18-34-year-old group, where 64% of respondents say they consider financial advice shared online reliable. The numbers go down in older groups. Among the 35+ group, 46% say they would never trust a social influencer for financial advice.
Helen McGinty, head of financial advice delivery at Skipton Building Society, explains: “When it comes to getting our finances in order, social media can feel like a good place to go for advice. It’s anonymous and helps us avoid conversations which can sometimes feel uncomfortable.”
Online financial advice isn’t necessarily bad
“There is a place for financial education online, and there are a lot of very well-informed voices and influencers across these platforms that do it well. But sometimes, when it comes to investment advice, content isn’t always as trustworthy as it appears, and it isn’t financially regulated,” says McGinty.
So it’s not about abandoning your online quest for useful advice, but about knowing where to look. To prove this theory, Skipton Building Society created a number of fictional social accounts that shared financial advice.
The panel evaluating the accounts found the one led by a female parenting and money management influencer felt most relatable. However, 21% found the account led by a male retired business owner and profitable investor the most trustworthy. The least reliable social media personality? A significant 42% would not trust the financial advice given by the male cryptocurrency investor.
The need for education on financial advice
According to Iona Bain, broadcaster and founder of the Young Money blog, it’s worrying how many young people do not have the know-how and experience to determine whether the financial advice they receive online is trustworthy, reliable and relevant.
She explains: “We urgently need proper financial education, better online regulation and more authoritative sources of information to cut through this internet jungle and ensure a whole generation doesn’t end up poorer and disillusioned about money.”
Luckily, the overall numbers look promising. For example, 87% across all groups would seek financial advisers for help over anybody else. Successful businesspeople (86%) and spouses (77%) are also near the top of the list for trusted financial information.
Watching out for scams
Bad financial advice on social media doesn’t necessarily have an ulterior motive. Sometimes it’s just people sharing incorrect information. In other cases, however, there could be an underlying reason for it: getting you to invest in a scam.
Some of the most common scams nowadays are perpetuated online. For example, social media offers that downplay the risks to your money are growing. And the number of investment scams that promise tempting returns – that are too good to be true – is also rising.
If the offer comes from somebody who claims to be a financial adviser, check to make sure they are on the FCA Financial Services Register. Social media accounts can provide good general financial advice, but shouldn’t be used as your main source of investment information. When in doubt, talk to a professional for advice.
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