In the realm of investment, a recent trend suggests a move away from seeking financial guidance from social media ‘finfluencers’ in favour of traditional financial avenues. Data shows that the influence of finfluencers on Generation Z has dwindled, with only 37% of individuals aged 27 or younger seeking advice from them. This marks a 13% decrease from 2021, signaling a change in perceptions towards social media influencers within the financial realm.
This shift is not limited to Generation Z alone, as Millennials have also shown a decline in seeking financial advice from finfluencers, with only 42% consulting them compared to 52% previously. It appears that investors feel their financial knowledge is inadequate to effectively manage their investments, leading them to turn to qualified financial advisors for professional guidance.
While the allure of free advice from finfluencers is undeniable, particularly for small-scale investors, the significance of seeking advice from qualified financial advisors should not be underestimated. According to Karen Barrett, the founder and chief executive of financial comparison site Unbiased, consulting with a qualified financial advisor can assist investors in constructing an investment portfolio that aligns with their risk tolerance and long-term objectives.
Statistics from Charles Schwab reveal that 81% of retail investors in the UK consider it increasingly important to seek advice from financial experts for their investment strategies. As a result, there has been a 7% rise in the number of investors seeking guidance from professional financial advisors, as well as a 7% increase in those turning to the financial press for information.
The surge in seeking professional advice is attributed to the prevailing macroeconomic climate, which has influenced the attitudes and behaviours of retail investors. With volatility and uncertainty in both local and international markets, investors are actively seeking professional advice to maximize their investments.
A primary concern regarding finfluencers is the absence of regulation and qualifications required to offer financial advice. While some of their advice may be reliable, it is imperative for individuals not to solely rely on social media influencers for financial guidance. The Financial Conduct Authority has taken steps to combat misleading advertisements from finfluencers, with the goal of shielding individuals from unsuitable and potentially costly advice.
In addition to the waning popularity of finfluencers, there has been a decline in the following of celebrity influencers promoting financial products and investments. This shift in investor behaviour underscores a heightened awareness of the potential risks associated with seeking financial advice from influencers, as evidenced by legal actions against high-profile figures such as Kim Kardashian and Cristiano Ronaldo for promoting financial products in a misleading manner on social media.
The evolving landscape of investment advice signifies a resurgence in traditional financial channels and a recognition of the value of seeking guidance from qualified financial advisors. As investors navigate the complexities of the financial market, the trend away from finfluencers underscores the importance of reliable and professional financial advice in making informed investment decisions.