Whilst social media has presented many with the opportunity to learn new skills and enrich their understanding of complex subjects, the increased access to knowledge it has provided has also resulted in some counterproductive developments, particularly when it comes to the financial services industry. Popular social media outlets such as TikTok and Instagram have provided individuals with the ability to present themselves as ‘financial experts’ and reach large audiences with their short-form video content and static posts advising on how to invest, save, and establish a financial plan. Whilst this is not necessarily inherently harmful, the risk of misinformation being spread by those without the necessary qualifications and experience is significant and can have severe real-life consequences.
Unrealistic Expectations
Once a social media personality amasses enough followers or engagement on their profile to generate considerable interest, they are able to generate income from their content through sponsorship or promotions. In order to attract this following, many ‘finfluencers’ promote ‘easy ways’ to ‘make six figures a month’ or ‘retire before 40’ through investing or other financial schemes. Unfortunately, whilst these goals are entirely unrealistic, the methods that these influencers advocate, such as investing in cryptocurrency, are often very accessible to the young and inexperienced. This vulnerable audience is drawn in by the lure of the promise of quick, easy money before making snap decisions without adequate consideration or professional advice, with costly repercussions.
What is being done about it?
The FCA has reportedly removed 10 times the number of financial promotions this year compared to 2021 and is monitoring the situation carefully. They are also in the process of implementing greater screening powers and tightening up the regulations surrounding this fairly recent phenomenon, in the hopes that there will be more restrictions on what creators are allowed to post. However, it seems that areas such as Cryptocurrency, which still lay outside the FCA’s remit, will continue to pose a problem for the foreseeable future.
Trust the Experts
There is no denying that starting financial planning early on is beneficial and that investing can be incredibly lucrative if done properly. However, financial planning is also an incredibly complex and circumstance-dependent profession that takes years of training and experience to become adept at; there is no substitution for bespoke, quality advice from a skilled professional when it comes to developing a strategy for achieving financial objectives. The reality of financial planning is that it often requires a long-term approach and that it is patience, communication, and professional advice that leads to success. As the old saying goes, if something sounds too good to be true, it probably is.
If you would like to arrange a complimentary consultation with one of our advisers regarding your financial circumstances and goals, click the link below to get in touch.
The Treasury Select Committee has called on financial services providers to reimburse individuals who have lost money as a result of authorised push payment (APP) fraud, with MPs telling banks that they must implement adequate fraud measures by March 2020 or face sanctions from the regulators.