As a quarter of Gen Z are turning to online influencers for financial advice, younger IFAs are using to social media to target Gen Z clients.
MDM Wealth director and IFA Daniel Martin who describes himself as a “young planner” as he is under the age of 30, told Money Marketing to grab the attention of of Gen Z clients “I have posted videos on TikTok and Instagram”.
Martin added that financial institutions need to adapt their engagement strategies to attract younger clients.
Supporting his argument, recent research from Prograd, a financial literacy platform, spoke to 1,213 people under the age of 25 and found 25% are turning to online influencers for financial advice.
However, Martin does see issues with Gen Z turning to influencers as they tend to “make advice statements regularly, and perhaps unknowingly, without regulatory oversight and particularly without any professional qualifications to back them up”.
Martin added that he has seen “harmful” advice videos online which may result in younger “individuals getting themselves into poor financial positions, before they’ve even started, and leads to a more general distrust of the industry as a whole.”
Additionally, an issue that arises with an adviser posting content to social media is the “regulatory concern”.
‘Attracting younger clients is the only way to keep our business sustainable’
Ablestoke Wealth Management IFA Lawrence Bearman who is also under the age of 30 said that a “big barrier to this [posting content to social media] is making sure everything is compliant”.
Bearman added that “Many of the ‘advisers’ or ‘finance gurus’ are not regulated and haven’t got the qualifications behind them to be advising such individuals and hence also don’t have to get anything pre-approved.”
Bearman also believes financial institutions need to adapt their engagement strategies to attract younger clients. He said: “I’d agree something needs to be done, especially considering the generational wealth shift that is taking place. Attracting younger clients is the only way to keep our business sustainable. However, that is easier said than done!”
Bearman said he is very active on LinkedIn.
21% of younger investors turn to Instagram to get stock tips and market forecasts
Prograd’s research found that just under a third (32%) of Gen Z said short-form content from finance specialists is their preferred advice medium.
Also, the type of advice Gen Z is looking for from online influencers is savings tips (49%), mental health support around managing money (28%) and advice on how to start a side hustle (26%).
Prograd shares Martin’s concerns that there are potential risks associated with misinformation from receiving advice from online influencers. This leaves them vulnerable to “inaccuracies and unverified information”.
Recently (15 August), Hargreaves Lansdown found that 21% of investors aged 18-34 turn to Instagram to get stock tips and market forecasts.
Hargreaves Lansdown head of investment analysis and research Emma Wall said that 16% of investors from the same category went to Facebook (Meta) for investment ideas, 14% to Reddit and 8% to TikTok.
When looking at investors over the age of 55, none used Instagram, Reddit and TikTok for investment ideas, although 1% do use Facebook.
Prograd founder Marco Logiudice said: “Our research spotlights a shift in how Gen Z approaches financial learning. They desire a relatable approach that resonates with their lifestyle and values. As this trend gains momentum, it’s important for financial institutions to not only acknowledge but actively participate in this evolving landscape, offering guidance that is both authentic and reliable.”
Nikita Kini, A 21-year-old University student from East London added: “Navigating the world of finances as a young adult is tough and it’s no surprise that influencers have become a go-to source for insights. They are able to explain complex concepts into bite-sized, engaging content. This makes finance seem more exciting and less intimidating.
“However, it can be hard to spot content that is misleading or false. What we really need are more financial institutions that offer personalised guidance that empowers without misguiding.”
From finfluencer to IFA
At the same time the FCA is taking a tough line on ‘finfluencers’ and the promotion of financial products or services online.
The regulator said the clampdown is geared towards stopping consumer harm by combating “illegal and non-compliant financial promotions”.
It outlined its proposals for social media guidance on 17 July.
The new guidance, being consulted on until 11 September, will reflect the current ways social media is used to advertise financial services and products, the FCA said.
The regulator added that it has ramped up its scrutiny of online financial promotions by ‘finfluencers’ who often market illegal products to their followers.
Finfluencers are usually people who have gained online fame and have large followers.
They can influence the financial decision-making process of their followers and fans through promotions or recommendations on social media.
In some cases, people who started out as a finfluencer have now tried to obtain an IFA qualification to legitimise the advice they give out via social media. Timi Merriman-Johnson, a 33-year-old content creator, known as Mr MoneyJar has a following of 17,000 on Instagram.
Mr MoneyJar is a UK-based financial education company. Merriman-Johnson is now training as an IFA.
Kia Commodore, a 25-year-old content creator, runs the financial guidance page Pennies to Pounds. She started out on X (previously Twitter) and YouTube before moving to Instagram. Her posts include such topics as buying your first house or saving for retirement. She too is also studying to become an IFA, the FT reported.
The Financial Conduct Authority found that fewer than 6% of IFAs are under the age of 30.
