Are you under the finfluence?
Daniel Liddicott
Sept 2024 • 2 min read
Are you under the finfluence?
Social media has become awash with financial influencers (also known as ‘finfluencers’) over the last few years. Whether they are talking about tax on TikTok or informing people about ISAs on Instagram, there is a real danger that those viewing their content may be at risk of making harmful financial decisions as a result.
Giving financial advice as we do is extensively, and rightly, regulated to ensure that any recommendations that are made to you are coming from specialists who are authorised to do so. Whilst more generic financial information is not necessarily harmful i.e., explaining the ISA annual allowance; some information given with good intentions to the wrong group of people could lead down a dangerous path.
I have seen one such example from a YouTuber (naming no names). She explained junior ISAs (JISAs) and how she and her husband have started paying into one each month for their toddler. Not an overtly bad thing to do by any means. She continued to show projections of what she believed the value of the JISA would be at their child’s various milestone birthdays – a powerfully persuasive method of showing the benefits of doing this.
However, there are problems with this. She used returns figures for her projections that are unrealistic (even if using a stocks & shares JISA over the long term). She did not once mention that the value of investments can go down as well as up and that the funds could realistically run out. It is not beyond the realms of possibility that some people viewing this content might then have opened a stocks & shares JISA for their child without fully understanding the risks involved.
This is just one relatively small example of how providing generic, selective information could lead to potential financial harm. Finfluencers have also been known to promote high risk, unregulated products such as cryptocurrencies without truly understanding or conveying the risks involved.
When under the finfluence, caution is required.