People are increasingly seeking financial guidance on social media. While financial influencers – or ‘finfluencers’ – can be useful in raising awareness around financial matters, there is also a darker side to the growth of unregulated advisers.
SOCIAL MEDIA AGE
Research by Barclays shows that more than one in four people in the UK use some combination of social media, community messaging apps and online forums for investment guidance. Of those who get their investment advice from social media, one in five cited ‘free access to financial experts’ as a reason. Meanwhile, one in four pointed to the fact it was ‘quick and easy to use’ as justification.
NOT ALL ADVICE IS EQUAL
Entrusting your financial decisions to social media, however, comes with risks. One significant danger is that many people are failing to carry out checks on the advice they see online. Specifically, the same study found that more than half of UK adults who use social media for investment guidance do not carry out checks to verify the reliability of ‘finfluencers’ and their content. Young people are especially vulnerable, with increasing numbers falling victim to scams, with 'finfluencers' often involved.
FCA CRACKDOWN
The FCA has interviewed 20 'finfluencers' who may be illegally selling financial services products; the FCA has also issued 38 alerts against social media accounts operated by 'finfluencers' which may contain unlawful promotions. In many instances, these influencers are not FCA-authorised and don’t have the qualifications to give financial advice.
Despite the fact anyone can pose as an expert online, fewer than half of those using ‘finfluencers’ always check that the information comes from a reliable source. Social media has its advantages, but making sure the advice comes from an accredited professional is the best way to steer clear of unsuitable investment advice and scams.
KEY TAKEAWAYS
Relying on information from social media can be dangerous |
Always check the credentials of anyone offering financial advice |
Speak to an independent financial adviser if you need help |
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.