A new study found that less than a third of Americans are using qualified advisors.
You don’t need any qualifications to give advice and go viral on TikTok and a lot of adults seem to be okay with that.
More than 3 in 10 Gen Zers rely on TikTok and Youtube for their financial advice, according to Vericast’s latest research. The marketing company surveyed 1,000 adults and found that this problem isn’t purely generational.
Across all age groups, less than a third of adults actually go to a bank or other financial professionals for guidance.
Vericast found that 66 percent of people expect banks to offer them new lines of credit and lower interest rates during this period of “unprecedented inflation.”
This is optimistic at best.
The Federal Reserve has been increasing interest rates since March in an effort to curb inflation. Mississippi State University finance professor, Brian Blank, explained the effects in PBS.
When the Fed increases its rates, Blank says, it “increases borrowing costs for banks, which in turn pass those higher costs on to consumers and businesses in the form of higher rates.”
So while you’re worried about your bottom line, banks are way more worried about theirs.
What to look out for
Having free advice available within a few screen taps is great in theory. Financial education should be accessible. TikTok gurus make advice free, fun, and digestible. But they need to be met with skepticism.
Larger creators often put entertainment value before accuracy which is how they’re able to gain massive followings on the platform. Flashing briefcases full of cash and telling people they can get rich quick can get thousands of likes. It doesn’t make it true.
Debt.com has previously reported on the dangers of “FinTok” and financial professionals said that the rhetoric that some accounts use is “dangerous.” Even if they aren’t lying, content creators may leave out bits of truth to appeal to their audience.
Be especially cautious if they’re trying to sell you something. Those looking to scam you might sell expensive financial courses or even tell you which stocks and cryptocurrencies to invest in.
The Institutional Investor points out in their reporting how prior to a Tesla shareholder meeting, FinTok was flooded with posts hyping up Tesla and the event. Anyone who chose to invest in Tesla stock because of that was swiftly disappointed. After the meeting, the stock tanked.
Content creators probably don’t care about your financial well-being if they’re telling you to pay them or overspend on other investments and luxuries.
It sounds counterintuitive, but when it comes to financial education on social media, people with fewer followers are often more trustworthy than those with millions.
Certified accountants and financial planners are on TikTok creating free, educational, and accurate content. But their videos aren’t as sexy or entertaining so they don’t gain the popularity that other creators do.
Although they aren’t flashing wads of cash and fancy cars, they’re still worth following if you’re hoping to actually learn a thing or two.
CPA and other financial licenses are usually public information. It makes it easy to see who is the real deal. Look people up and check their certifications before taking their advice to heart.
But the most important thing is to look at multiple sources off of social media as well.
Licensed professionals and popular TikTokers agree: social media is a good place to start educating yourself, but shouldn’t be your only source of information.
Published by Debt.com, LLC