Social media, it's a bit like marmite!

Social media use is probably at an all-time high. Some people love it, some people hate it. Personally, I'm in the love it camp. I use it to my advantage for things that benefit me, and try not to get lost in the white noise. If I want to know what's going on in Formula 1, Instagram is the place to be. If I want home interior inspiration, I head over to Instagram and TikTok. If I need to figure out how to do something in excel, I'll run a search in TikTok and find myself a short little video to follow.

Every few scrolls, you can guarantee I'll come across an influencer. Somebody who is trying to influence my decisions. Some of these people are just sharing their opinions and experiences, others are getting paid to push something in what is clearly an advertisement.

I'm not going to lie, it's tempting, and I have been influenced for sure. Be it paint colours that are ‘on trend' or be it Zara's Spring edit that's just dropped, I have undoubtedly made a decision or made a purchase based on seeing an influencer on social media.

What is a finfluencer?

Finfluencers are people who are on social media telling people what to do with their finances. And based on the time I spend on social, there are more and more people who I would class as finfluencers.

What's probably important to note at this point is that these finfluencers are not Financial Advisers, and they are in no way authorised or regulated to give the advice they are giving. In the UK, we have strict regulations in place which is designed to protect you from poor products and poor advice. As a regulated person, there are rules I have to follow, and we have a compliance process to check anything which is deemed to be promotional. It is at times frustrating, but ultimately it keeps us all safe.

Content

I sometimes see great content that gives people very generic hints and tips usually around how to budget better, or simple swaps to make at the supermarket to save money. It's harmless and could genuinely help somebody to save a few pounds.

Unfortunately, I also see content that I would class as dangerous. Content which is inaccurate, misleading and which could cause detriment if followed. As an example, I've seen people recommending which Crypto currency to purchase without mentioning that it's not a regulated product and without explaining all of the risks involved. The video made it sound like an easy route to get rich quick. I've also seen advice on how to manage your accounts if you are self employed so you pay less tax, but the advice is such that you would cause yourself real issues with HMRC. 

Guidance versus advice

Away from the outrightly dangerous content there is also a somewhat grey area where guidance is sometimes interpreted as advice. 

So, what's the difference? Guidance is generic and generalised, it lacks personalisation. An example of this might be that you see a video saying, “Be quick to open an account with ABC company which is currently offering an interest rate of 5%”. If you've got money sat earning 1% then it could indeed be a good idea to open the ABC account. But if you've got money in an ISA or earning 6% then it may not be the greatest plan to move it to ABC.

This is where advice comes in as it's personalised and looks at your finances and what's right for you.

I recently attended a well-publicised webinar with a high-profile guest speaker about investing. Some of the slides were brilliant and went through the principles of investing explaining that diversification and holding investments long term are key. However, the webinar started from the base assumption that all attendees were in a position to invest, and it was this that seriously made me twitch. There was no mention of holding an adequate emergency fund before considering investment and there was no discussion about considering debt repayment before investing. It didn't cover attitude to risk or the benefits of pensions, instead promoting the use of an Exchange Traded Fund which tracks a specific market, assuming this would be suitable for all investors when it may not be.

I opened the chat and saw people being told to invest as much as they can afford, and that it was ok to hold Crypto as long as it was small percentages of the overall. I have absolutely no doubt that people went off that webinar and invested. People who should be using their money for other things before investing it.

Afterwards, I did some googling and found that the company providing the webinar is not authorised or regulated in the UK. They are a platform designed to increase financial education which in principle is brilliant, the UK needs as much financial education as possible. But they overstepped and they totally missed the mark, making the education dangerous in the wrong hands.

The value of advice

Of course I'm going to say financial advice adds value. Most people have a good understanding of finance and there is so much available online but ultimately, it's guidance and not advice personalised to you. You don't know what you don't know and think about when you would normally bring in an expert.

For me, a recent personal example is an electrician. I'm perfectly capable of wiring a plug or changing a socket but I know that upgrading my fuse board is beyond my capabilities, so I call in the experts. Financial advice is the same and the value an expert adds can be extraordinary.

So, what do I think about the rise of the finfluencer? Honestly, it depends on the finfluencer. If they are ethical, make clear it's guidance and encourage people to get advice I'm all for it. Anything else, my view is just keep scrolling!

For more help and advice or to receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.