Over the past few years, a new type of influencer (person with the ability to influence how others behave because they have built a reputation based on their knowledge and expertise, generally on social media platforms) has emerged. They are called finfluencers.
These individuals focus on the niche area of personal finance, investing and creating personal wealth.
Within this finfluencer social media world, there are also different subsets of individuals that focus on investing, the Fire (financially independent, retire early) movement, the debt-free community, investing in real estate, frugality and living sustainably.
Most finfluencers started out on YouTube.
However, platforms such as Instagram and TikTok have also seen an increase in people posting financially related content.
These finfluencers range from experts who might focus on, for instance, investing, but also people with no financial background who taught themselves or who share insight into their own finances or personal experiences.
PLATFORMS OF CHOICE
The younger generations look at YouTube as their learning platform of choice; you can find a video on literally any subject on the platform.
A recent study found that approximately 19% of Generation Z (aged between 13 and 27) watch YouTube videos or read finfluencer blogs to gain more knowledge and insight into financial matters.
Generation Z and Millennials (between 28 and 42) make up 60% of the TikTok platform, while 67% of Instagram users are between 18 and 29 years old.
It is clear that younger generations regularly use these platforms for learning and information-gathering.
Any logical person would tell you it is dangerous taking advice – especially financial advice – from just anyone.
Most social media platforms require their content creators (influencers) to provide a disclaimer in the video or post to indicate the content is sponsored or that the content is promotional material, to keep the influencer honest.
More responsible posters also provide additional disclaimers that their information should not be seen as advice, but just information or the person’s opinion.
There is a downside to finfluencers: Financial novices (or younger consumers) might take personal opinions or sponsored content as advice and make damaging financial decisions.
It can become dangerous when, for instance, a finfluencer might suggest that a specific share or asset is a good investment, or when finfluencers who focus on cryptocurrencies encourage others to do the same.
This is a definite concern for the financial services industry.
For the most part, however, content creators are opening a whole new world to younger individuals, and more importantly, to people who have never had the opportunity to learn about things like investing, becoming debt-free, or creating wealth.
The communities created around saving money, starting to invest, becoming debt-free and living a more frugal lifestyle, indicate a thirst for knowledge about personal finances, and a need to not just survive financially, but to thrive and create wealth.
Also, there is a definite shift in the personal finance community to start thinking of spending money more mindfully and moving away from overconsumption, focusing on quality, rather than quantity.
This, in itself, is a wonderful phenomenon that can definitely stand most people in good stead, especially in these hard times of high inflation, interest rate increases and high living costs.
It as a step in the right direction and can even create opportunities, not just for the audience of these finfluencers, but for financial planning professionals.
In a society where we are not necessarily used to talking about finances, it is refreshing, and financial novices can learn about personal financial management on their own terms.
However, these novices should not throw caution to the wind. They should realise everyone’s finances and financial goals are different and should not take specific financial advice as gospel.
Finfluencers will never replace traditional financial planning professionals. I say this for two reasons.
Firstly, most finfluencers focus on one specific area of financial planning or personal finances.
Secondly, financial planning is a profession that needs quite a bit of expert knowledge, which some finfluencers just don’t have.
Much can be learned from social media platforms on the basics of personal finances and investing, but financial planning essentials such as risk planning, retirement planning and estate planning will remain in the hands of financial professionals.
- Liezel Alsemgeest is director of the School for Financial Planning Law, University of the Free State.