Beware of the Wild West of social media
AS PART of its annual report on the state of the advice market, OpenMoney asked people how they looked for advice. Almost 10 per cent of respondents aged between 18 and 24 say they would use social media – including TikTok, Twitter and Instagram – while just three per cent have paid for financial advice in the last two years. This compares to four per cent who would use social media for financial advice and seven per cent across all age groups who have paid for professional guidance. The research found the most popular source for all ages was research on product provider websites, followed by friends and family. The personal finance sections of newspapers came third. In the 18 to 24 age group, friends and family topped the list, while product provider websites were second and social media came third. Anthony Morrow, co-founder of OpenMoney, said: “It is clear from the follower numbers of social media financial ‘influencers’ on platforms such as TikTok and Instagram that there is demand for information about investing among young people. “For those without access to other forms of financial advice, turning to social media might seem like a natural option but it’s like the Wild West of investments.
There’s little or no regulation and an explosion of misleading and inappropriate investment information puts followers in real danger of losing their money.
“Because many influences don’t follow the same rules as regulated firms around including risk warnings in all investment information, some followers might think not having warnings means it’s less risky when usually the opposite is true.”
Morrow points out the importance of understanding the qualifications and experience of the advice source.
He added: “It’s incredibly easy to be influenced, often without even realising, by self-proclaimed experts who have no experience or qualifications to offer investment advice. If you’re interested in investing, make sure you are getting information from someone who is properly qualified to talk about the options and that you understand, and are comfortable, with the level of risk you are taking.”