Gen Z investors reliant on LinkedIn and TikTok finfluencers for advice
Gen Z has led the charge in a growing trend of using social media for investment advice, according to new data from Charles Schwab.
Over 70 per cent of Gen Z use social media and financial influencers – dubbed finfluencers – when making investment decisions, the data suggests.
LinkedIn was valued as the top social media channel for the younger generation of investors at 46 per cent. This ranked above Instagram (44 per cent), TikTok (43 per cent) and Reddit (40 per cent).
Within the age demographic, 53 per cent said specialist finfluencers were important to influencing their investments. This narrowly beat financial media at 52 per cent.
More than six in ten were also more likely to use online investment communities when making decisions than to look to well-known professional investors at 57 per cent.
Gen Z valued celebrities discussing their investments at a greater importance than other generations at 44 per cent, compared to 36 per for millennials.
Regulators clamping down on finfluencers
Richard Flynn, managing director at Charles Schwab UK, said: “Digital platforms and the sheer volume of financial information available today has made it much easier for young investors to trade.
“This is allowing the creation of online investment communities and forums, with finfluencers and social media playing a much more important role in the investment process than in previous years.”
The rise of finfluencers has come with heated controversy. In October, the Financial Conduct Authority said twenty finfluencers were being interviewed under caution as it cracked down on the illegal touting of financial services products.
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The City regulator also issued 38 alerts on its warnings page against accounts operated by finfluencers that may contain unlawful activity.
Steve Smart, joint executive director of enforcement and market oversight at the FCA said: “Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt.”
Despite this, 67 per cent of young investors said they valued financial advisers – the most popular category across all age demographics.