By Alexander Frolov, CEO and Co-Founder of HypeAuditor
Just 8 per cent of UK adults have taken financial advice over the past year. Yet this is likely to change with more of us now turning to social media platforms, such as Instagram or TikTok to become well versed in dealing with expenditures, credits and other money matters.
Although this phenomenon has been gaining traction for a while, it has become more prominent due to the cost-of-living crisis worsening and many more consumers seeking ways to adapt to the current economic realities.
“Finfluencers” (i.e. social media influencers making content around financial or money-related information and advice) have revolutionised financial education thanks to their bitesize and light-hearted delivery. This is especially true among Generation Z and Millennials who often have no other way to access free content to better their financial educations.
In boosting and democratising financial literacy levels, “Finfluencers” have also come under the regulatory microscope, with some being fined for advertising unregulated crypto-currency schemes: Kim Kardashian and Kevin David being among the masses. This comes at a time when over 7,200 reports of scams linked to cryptocurrencies were made to the FCA, the UK’s finance watchdog, in the year leading up to June 30, 2022.
For financial brands, the rise of this new category of content creators can offer great opportunities to engage with consumers in an authentic way, perhaps even with groups they never had the opportunity to target before. However, they should proceed with caution.
So, what should financial marketers keep in mind?
The rise of “Finfluencers”
With the rise of online banking, cryptocurrency, and general global economic uncertainty, the corresponding growth of “Finfluencers” across social media platforms is not surprising. More specifically, this reveals a strong impetus to fill a gap where traditional financial institutions or more formalised financial planning businesses have made access to basic financial literacy either challenging to navigate or cost prohibitive to younger people.
According to proprietary research from HypeAuditor, the “finance and economics” Instagram influencers category grew at a rate of 29% globally in 2022, the fastest growing of any category, surpassing those traditionally associated with influencer marketing such as beauty or travel. In the UK, these types of influencers grew by 24% and belong in the top five of the most popular content on Instagram, which includes Lifestyle, Music, Photography and Gaming content creators.
In 2022, our data also showed that millennials aged between 25-34 are most likely to follow Finfluencers, with followers being predominantly male. This is not surprising as many millennials are now at the stage of buying a first home or investing in shares for the first time. Platforms such as Instagram, YouTube or TikTok provide easily comprehensible information from FinFluencers — an attractive alternative to the paid or intimidating options presented by traditional financial planners.
However, when checking some of the most popular related hashtags #personalfinance #investing, #crypto, it is clear that the quality of advice provided is not equal. Even though some Finfluencers can be trustworthy, others are sharing downright dubious information such as borrowing money and investing it in high-risk assets or promoting expensive courses, which often only contribute to the Finfluencer’s own wealth.
Heed the guidelines or risk losing consumer trust
Earlier this month, the FCA proposed tougher measures to better regulate unfair or misleading financial marketing content. In particular, the watchdog wants to impose new screening checks to reprimand any wrongdoers who are promoting financial schemes without clearly highlighting the risks. However, more will need to be done in relation to dubious crypto schemes, currently outside of the FCA’s remit.
We can also hope that the Online Safety Bill, when it finally comes into play, will also help towards the prevention of other financial scams, by forcing the social media platforms to take more steps towards this issue.
In addition, members of Parliament at Westminster are also looking at proposing an amendment to the financial services and markets bill to make provisions for UK citizens to access personalised financial guidance from regulated services firms only. This will hopefully help towards providing access to more trustworthy sources to consumers.
While steps are being taken by authorities, ultimately, financial marketers, who hope to partner with Finfluencers, also need to do their due diligence and have appropriate risk management systems and monitoring processes before agreeing to partnerships.
One of the most effective ways to do so is by relying on data analytics platforms and campaign management systems that continually check the quality of an influencer’s audience as well as providing measurement on their activities. Brands must be vigilant in the discovery phase: determining the most relevant and reliable Finfluencers to partner with.
From a content perspective, it is crucial for influencers and the brands working with them, to stay up to date with any announcements from the FCA or any other relevant UK authorities. It is also worth remembering that financial content shared on social media should stay as informative only and doesn’t stray into “advice”. Whilst many influencers in the UK do have finance backgrounds, not all are qualified to provide proper financial guidance.
Ultimately, how brands choose to engage with content creators must be underpinned by a thorough understanding of both the changing regulatory guidelines and how the content provided by a Finfluencer is presented. This way, the integrity of the brand and the influencers themselves is maintained — not to mention the provision of quality information to their followers.
