Influencers offer financial cial guidance, but is it a social ial media step too far?

Social media stars are the new reference for stock market tips – but can they be trusted? By Sam Benstead and Marianna Hunt

The investment industry is undergoing a revolution in the way people trade and how they get their investment ideas. Where once stockbrokers charged high trading fees and investors followed their stock tips, now sleek mobile applications allow commissionfree trading and social media is a major source of investment inspiration.

This has opened up investing to a new audience of younger savers and driven the rise of investment “influencers” outside mainstream financial services who use platforms such as short video app TikTok, Instagram and online forum Reddit to promote their investment ideas.

These influencers often do not have professional backgrounds in investment or official qualifications, nor do they always have disclaimers on their videos saying that they are not giving financial advice.

On TikTok the “investing” hashtag currently has 1.3 billion views, while the “personal finance” hashtag has amassed 3.4 billion.

One influencer is 20-year- old Poku Banks, from Nottingham, who creates investment- related videos for his 225,000 followers, tackling topics such as how mortgages and Junior Isas work.

“I’m giving financial guidance, not advice. I’m just sharing my experiences,” said Mr Banks, who, in some of his videos, tells viewers to do their own research.

While he does say that viewers should not invest money they could not afford to lose, he has discussed high-risk strategies such as peer-topeer lending and commodities in a video captioned “4 Safe and Secure Ways to Grow Your Money” and promoted a cryptocurrency exchange.

Taylor Price, also 20, from New York, is another TikTok investment influencer and has a million followers.

Her videos target young novice investors, with titles such as “How to invest with no prior knowledge” and “How to start investing at 18”.

Sometimes, companies pay her to promote certain stocks, shown by a hashtag # ad on her videos. Since August, Ms Price has earned a sixfigure sum from her work, which includes influencing and running workshops.

“I don’t engage in advising others on investments for compensation. My financial coaching across my social networks, which is 100pc free, doesn’t warrant any sort of registration or licensing requirements,” she told this newspaper. She said she was challenging the status quo by having

‘I am giving financial guidance, not advice. I am sharing my experience’

honest conversations about money.

Reddit, an online forum, has a page dedicated to stock market tips, called WallStreetBets which has 4.7 million members. This year, its members have rallied behind GameStop, an American video games retailer, to send its share price soaring 2,000pc. It has since fallen back.

The move was designed to counter professional investors who were “shorting” the shares and would make money if they fell in value. British investors have joined in the frenzied trading of GameStop, whose shares were among the most-bought last week by customers of established stockbrokers A J Bell and Hargreaves Lansdown, as well as those on newer rivals such as Freetrade and Trading 212.

Another type of investment influencer can be found on stockbroker eToro’s “copytrading” function, where users can choose to copy the trades of other members of the public for free.

One is Jeppe Kirk Bonde, who has more than 288,000 followers and 22,600 copiers. He has made 30pc annually since 2013 and now has £30m tracking his trades.

But investment influencers, particularly those who tip stocks, can be dangerous, according to Robert Smith, of Barclays Wealth and Investments. He said their motivations often did not align with the interests of those looking for advice and their tips could spread rapidly on social media.

Some financial planners are fighting back with their own content, such as Amyr Rocha-Lima, of planning firm Holland Hahn & Wills.

He said personal finance on social media was dominated by people boasting about how much money they made through cryptocurrencies or day trading, but the platforms could be used as a positive tool as well.

Mr Rocha-Lima has posted short videos on TikTok tackling topics such as how share dividends work and the relationship between a stock’s price and its value.

“Financial planning professionals have historically been great at taking a proactive approach to providing financial literacy education in their communities. Social media is simply a place to do more of the same, but potentially with a much wider reach,” he said.