A new report by the World Economic Forum (WEF) details the impact of “Finfluencers”, according to Financial Advisor. They are influencers who primarily use social media to promote advice about finances and investing, popularized on Instagram, Reddit and TikTok.
Their influence is helping to shape the future of the financial information industry, a trend that takes on added importance with baby boomers (born 1946 to 1964) and members of the silent generation (born 1928 to 1945) expected to pass down about $73 trillion to younger generations by 2045.
The report said the Finfluencers’ use of social media is helping to drive the democratization of financial information by providing new tools for financial advice among Gen Z and millennials, who are entering the financial markets at an earlier age than previous generations. A FINRA study found over 60% of US investors under age 35 use social media as a source of investment information, compared to 57% who use financial professionals.
But Meagan Andrews, lead of Capital Markets Initiatives at the World Economic Forum, noted the need to be cautious about sources of financial advice. “Social media is such a powerful conduit to get people interested in personal finance and financial markets and to make them feel seen,” she said. “But also the risks with misinformation and disinformation are real.”
The World Economic Forum report identified six trends it said are important for the financial advice sector: changing demographics; goals of holistic financial well-being; the need for digitally accessible and highly personalized advice; transparent and fair pricing; and growing social media reliance.
The WEF points out that social media makes financial advice feel more inclusive, and is often one of the first landing points for younger generations when researching how or where to invest. But more investor protections are still needed for this segment of information.
“Social media has made learning about financial topics more engaging and accessible for new retail and non-professional investors through short, entertaining videos that use creative ways, such as memes and metaphors, to explain financial concepts,” the WEF said. “While this trend has brought increased access to financial literacy and advice to many people, the quality can be inconsistent, surface level and susceptible to fraud and misinformation.”
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