In a recent article, Nomi Bodlani, head of strategic markets at Allan Gray highlighted the dangers of following financial advice on TikTok. Bodlani also cautioned that the phenomenon has opened the door for scammers and fraudsters to manipulate the emotions of users in order to get money.
“The big benefit of TikTok is that it allows users to dole out and obtain information in short, easily digestible video bites, also called TikToks. that can make unfamiliar, complex topics, such as those related to personal finance and investing, more palatable to a younger audience,” according to a Wall Street Journal article.
“TikTok isn’t the only social-media platform popular with young people that features financial advice. YouTube and Instagram carry videos with financial content as well. But TikTok is a hit with younger generations in part because of its quick-hit videos, easily navigated swiping functions and highly personalised content suggestions. And the numbers of young TikTok users viewing financial-related content on the platform of late have surged, a trend that many users and industry professionals expect to continue.”
According to a survey conducted in late January by LendingTree’s MagnifyMoney unit, about 41% of Gen Zers, those born roughly beginning in 1997 up until a few years ago, reported turning to TikTok for investment information within a month, versus 15% of millennials, often categorised as those born between 1981 and 1996. Recent research from Greenlight, an allowance and debit-card app that recently launched a financial-education and trading arm, shows that 35% of respondents aged between 13 and 20 have turned to TikTok for personal finance and investment advice.
Can TikTok users, many of whom are in their teens, 20s or early 30s, trust the financial advice that is increasingly being offered on the social-media platform?
Many financial professionals and TikTok users themselves have expressed their concern about the accuracy of financial advice sometimes given on TikTok (and other platforms) and a lack of transparency regarding the identities and qualifications of people giving the information.
TikTok, on its financial-related hashtag pages, has also warned users to be careful of the financial advice they see on the platform and to report behaviour that might fall short of community guidelines.
Potential concerns aside, many young people in their 20s and 30s say they find TikTok’s medium appealing and use it to help educate themselves about pertinent financial-related topics that they often haven’t learned in school or from their parents.
Should FSPs use this as a financial education platform? What do you think?