The past few years, a new type of influencer using social media has emerged. These persons have the ability to influence how others behave because they have built a reputation based on their knowledge and expertise.
These individuals focus on the niche area of personal finance, investing, and creating personal wealth. In simple terms, a finfluencer.
Within these finfluencers there are also different subsets of individuals who focus on investing. These are the individuals who possess the financially independent, retire early (Fire) mindset, who are devoted to savings, a debt-free society, investing in real estate, champion frugality and living sustainably.
Most started out on YouTube, posting financially-related videos, later posting their content on platforms such as Instagram and TikTok. They range from experts in their field of investing to those with no financial background, but self-taught. They share their own finances or personal experiences with their viewers and subscribers.
A recent study found that about 19% of Generation Z (aged between 13 and 27 years) watch YouTube videos or read blogs of finfluencers to gain more knowledge and insight into financial matters. Generation Z and Millennials (aged between 28 and 42 years) make up 60% of the TikTok platform, while 67% of Instagram users are between 18 and 29 years of age. It is clear that younger generations regularly make use of these platforms for learning and information gathering.
Any logical person would tell you it is dangerous taking financial advice from just anyone. And yes, there is a definite downside to finfluencers and that is that financial novices (younger consumers) might take personal opinions or sponsored content as advice and make damaging financial decisions.
In my opinion, it becomes dangerous when a finfluencer suggests to viewers or subscribers that investing in a specific share or asset is a good investment or when finfluencers that focus on “investing” in cryptocurrencies, encourage their viewers or subscribers to do the same.
In my mind, this is a step in the right direction and even creates opportunities, not just for the viewers and subscribers of these finfluencers, but also for financial planning professionals. In a society where we are not necessarily used to talking about finances, this is a refreshing experience and financial novices can learn about personal financial management on their own terms. These novices should not throw caution to the wind, but should rather realise that everyone’s finances and financial goals differ and come to the agreement to not take specific financial advice as gospel.
For financial planning professionals, what could finfluencers mean for them? Well, who would not want financially savvy, young clients, open to learning, on their way to creating a secure financial future and wealth? Finfluencers could therefore act as a resource to increase financial literacy and drum up excitement for personal finances and in doing so, indirectly lead more people to seek out financial planning professionals and become financially secure.
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Prof. Liezel Alsemgeest
is director of
the School for Financial Planning Law at the University of the Free State (UFS)
.
