The degree to which younger investors rely on social media and online influencers for financial advice may alarm some wealth managers, particularly Gen Xers and Boomers. There is good reason for this concern. Older advisors who didn’t grow up with social media are especially aware of how ripe it is for abuse. In fact, 95,000 people in 2021 reported losing $770 million collectively to fraudulent activities that were initiated on social media platforms.[i]
Still, the trust younger investors place in social media is undeniable. Rather than fight that fact, wealth managers would be wise to embrace these platforms in the same way major financial brands have, and develop content that is engaging and informative for younger investors.
A Preferred Channel for Advice
A number of surveys have demonstrated how much faith Millennials and Gen Zers have in social media.
· 79% of Millennials and Gen Zers report they have gotten financial advice from a social media source, according to a January 2023 survey commissioned by Forbes Advisor.[ii]
· Gen Zers are five times more likely than investors from older generations to say they receive financial counsel from social media, according to a survey by CreditCards.com.[iii]
· Social media platforms are even beginning to displace the most prominent search engine. A survey of how Gen Zers find lunch recommendations offered signs of what is to come. Today, 40% of young people use TikTok or Instagram, rather than Google
The Rise of “Finfluencers”
Younger investors like engaging with personalities on social media. Digital creators who dispense financial advice – the new breed of “finfluencers” – have built sizeable audiences. Among the popular creators who offer valuable lessons on the basics of money management and investing are Humphrey Yang (@humphreytalks), who has 3.3 million followers on TikTok, and Delyanne Barros (@DelyanneTheMoneyCoach), whose TikTok videos have earned 3.6 million likes.
These influencers have garnered a considerable amount of trust. Another survey found that 37% of consumers overall trust social media influencers more than they do brands, and Gen Zers and Millennials are two times more likely than Boomers to trust influencers.[v]
Big Financial Brands Have Embraced TikTok
Some of the best-known names in financial services have recognized that TikTok is more than a site where Gen Zers go to watch dance and lip-syncing videos and catch up with the latest viral trends. Brands like BlackRock
Follow the Best Practices for Engagement
As wealth managers establish a presence on social platforms preferred by younger investors, they are likely to find more engagement if they follow the general rules for developing compelling content on these sites.
· Post Regularly. More people will engage with your content if you post frequently. Ideally, you’ll want to publish daily or at least several times per week. If that is too ambitious as you get started, try to post new material at least once per week. Use the “appointment TV” mindset of scheduling on a set day and time. That way, your audience will know when to be on the lookout for new content.
· Make It Interactive. Younger generations don’t simply want to be passive recipients of content. They want to weigh in, too. While compliance rules in a regulated industry like financial services make this more complicated, any interactive elements that the regulations and your compliance department may allow—like polls—will help generate more engagement.
· Tap Your Younger Staff. Like members of any age group, younger investors prefer engaging with people they can relate to—and that often means members of their own generation. The big brands have been wise by taking advantage of the younger members of their staff. They post informal educational videos, often recorded as they sit at their office desks. Their tips and insights are delivered with simple, jargon-free language that anyone can understand.
· Make It Personal. Everyone can provide “Investing: 101” information. It’s much better to make the content personal. Anyone who has a unique voice and talent for delivering financial and life lessons in creative and less conventional ways will build a following. Posters should share their own experience learning financial basics and even making beginner mistakes. Celebrate milestones, like reaching a savings goal, and invite followers to do the same. The personal anecdotes will get people to connect with a content creator and keep coming back for more.
Trendsetters Who Will Control Wealth
Given that the oldest Gen Zers are still only 26, some advisors, who are already pressed for time, may not believe this age group controls enough wealth yet for them to be worthy of too much attention. But there are three good reasons not to make that assumption. First, in today’s entrepreneurial age and with the rise of many digital creators, a number of these young investors have already accumulated significant wealth. Second, this group also stands to inherit large amounts from their parents and grandparents, and connecting with them early could enable advisors to buck the trend of losing clients as wealth transfers across generations. Finally, younger age groups are often early adopters of major trends. The social media preferences and habits they exhibit often carry over to older generations, once they have had the time to discover the merits of the trends younger generations recognized early. The lessons wealth managers learn from connecting with younger clients and prospects will almost inevitably become applicable for all generations of investors.
[i] Source: “Social media a gold mine for scammers in 2021,” Federal Trade Commission, 1/25/22
[ii] Source: “Nearly 80% of Young Adults Get Financial Advice From This Surprising Place,” Forbes Advisor, 1/23/23
[iii] Source: “Poll: Most Americans learn about finances from friends and families; But many Gen Zers rely heavily on social media for advice,” CreditCards.com, 4/5/21
[iv] Source: “Gen Z Uses TikTok Like Google, Upsetting the Old Internet Order,” Bloomberg.com, 7/29/22
[v] Source: “More than a third of consumers trust social media influencers over brands,” Agility PR Solutions, 3/3/23