With more than half of the global population with a social media presence, it’s no surprise that it’s permeating into different aspects of our everyday lives. From purchasing decisions to political ideologies, the influence of social media is wide and rapidly escalating.
And the financial world isn’t any different. Similar to the popularity of makeup and fashion gurus, there has been a growing number of financial and investment advisors on social media. In today’s digital age, millennials and Gen Zers are seeking financial literacy and investment advice on Youtube, TikTok, Instagram, Facebook and other platforms.
Social media holds immense power to help companies gain a cult-like following from retail investors. These are known as ‘Meme Stocks’. One of the most well-known examples of meme stocks is GameStop. One viral video by a Youtube persona led to the company’s share prices surging to nearly $500!
It’s no secret that because of a lack of modernisation, the schooling system falls short when it comes to financial literacy. Millennials often find themselves thrown into the real world without any useful knowledge about the financial world. They understand the importance of investing but don’t know where to start. And this is where social media enters the picture.
According to WSJ, 18% of millennials prefer to learn about finance on social media, while 46% go to websites. In comparison, only 25% seek in-person financial advice.
A lot of people are interested in investing. However, for most non-finance professionals, finance may feel confusing, monotonous and boring. Social media does a great job of bridging this gap. Apart from videos and resources mimicking traditional financial advice, you can find a plethora of memes, bite-sized videos and other content offering a fun approach to financial management.
However, relying on social media for financial tips comes with certain drawbacks. Unlike traditional financial advisors, a person doesn’t necessarily need any qualifications to share financial advice on social media. If a video garners thousands of likes, that’s not an indication of its credibility.
Herding is a common phenomenon on social media where people blindly follow other people’s decisions. When it comes to trading or budgeting decisions, a slight error in judgement can be catastrophic for your financial future. While there is no harm in seeking guidance from financial influencers and checking out new platforms, you should do your own research before making a decision.
Moreover, online financial opinions often fall short when you require personalised guidance. You can’t depend on an influencer to help you with a time-sensitive and personal financial decision. Are you getting married soon? In addition to looking into the name changing process at the UK Deed Poll Office, you should also consider a prenuptial agreement. And for this, you should consult a professional financial advisor and family law attorney.
Considering that more than half of millennials and Gen Zers are turning to social media for financial advice, financial professionals and institutions shouldn’t miss out on this opportunity. After all, it’s crucial to be where your target audience is. Building a presence on social media is essential for lead generation.
Especially in the wake of a global pandemic, establishing a digital presence has never been more important. You can also utilise social media platforms for highlighting your brand purpose and garnering community trust. Social media can be a vital tool for building and nurturing long-lasting client relationships.
When it comes to finances, people need someone they can trust. And financial advisors and companies can often come across as cold and intimidating. With the help of social media, you can humanise your brand and make prospects feel welcome.
