For most people, if they want to learn about something, the internet is generally their first port of call. It’s a trove of information. Unfortunately, only some of that information is treasure. Some of it can be actively dangerous, even if it’s given with the best of intentions. This is particularly true of financial advice.
The rise of the “finfluencer”
You don’t necessarily have to be qualified in something to be knowledgeable about it. In fact, some of the best content on the internet is created by enthusiastic amateurs. What’s more, this content often connects with markets and demographics professional content would struggle to reach.
To begin with, content creators can and usually do pick a specific target market, often a very narrow one. This tight focus allows them to create content that is highly relevant to that market.
For example, finfluencers targeting older demographics will often address fairly mainstream topics such as mortgages and savings. By contrast, influencers targeting younger demographics may address “edgier” topics such as cryptocurrency and disruptive industries.
Similarly, finfluencers going for older demographics often present their content in a way that echoes traditional media. Their main channels tend to be blogs and podcasts. Influencers targeting younger demographics are more likely to produce multimedia content. Their main channels, therefore, tend to be social media platforms.
The benefits of finfluencers
You could make a strong case for arguing that the rise of the finfluencer is a fairly strong indicator of the lack of effective financial education in the UK. Traditionally, children were taught maths at school but schools did not directly teach much, if anything, about personal finance.
This meant that, for decades, children either learned about personal finance from other sources or did not learn about it at all. Some of those who did not learn about it at all as children did manage to learn about it as adults. Many of those owe a substantial part of their education to the internet and its finfluencers.
Now, schools are starting to provide some level of financial education. It is, however, often severely lacking. This means that a lot of children are getting their knowledge of personal finance from other sources. In some cases that will be parents and family. In others, it will be purely from finfluencers. In many, it’s likely to be a mixture of both.
Finfluencers also have much more freedom to adapt their content to customer demand. For example, if an issue makes news headlines, influencers of all kinds will often be quick to jump on it. This helps them get people’s attention and inform them while they educate them. Educators following preset formats (like the national curriculum), simply cannot do this.
The drawbacks of finfluencers
There are three main drawbacks to finfluencers. The first is that there’s a difference between enthusiasm and knowledge. Finfluencers may have the best of intentions but they may not necessarily understand their subject matter as much as they think they do.
The second is that most finfluencers simplify complex topics at least to some extent. Finfluencers targeting older and/or more sophisticated markets can get away with creating information-dense content. They are also more likely to have audiences who understand that general advice does not necessarily apply to every possible situation.
Finfluencers targeting younger demographics, by contrast, are much more likely to use very succinct means of communication. These may literally only last a few seconds (e.g. a Tiktok) up to 10-15 minutes (a YouTube video). This effectively forces them to hone in on a very small part of a topic and distil it down to its bare bones.
The third is that influencers can end up promoting very questionable products, services and organisations. They are outside the direct control of the FCA although the FCA can regulate the firms that use them. They are also under the control of the ASA and, ultimately, trading standards. As always, we support our clients in doing their own research, but would always advocate for professional help before making any significant decisions regarding your finances.
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