00:00 Only 8% of people use financial advisors. So 92% look at other things. Nearly, I think
00:09 49%, nearly 50% of 16 to 34 year olds use social media for their investment decisions.
00:15 What is that all about? Because most of those people giving the advice don't know what they're
00:20 talking about. These are life changing situations that could occur from someone making money
00:26 from other people's needs and desires, which is, I think, ethically wrong.
00:31 We'd all like to have a little bit more money in our pockets. Who wouldn't? Especially with
00:35 cost of living pressures, meaning every penny needs to go further than ever. But we're being
00:41 warned to have our wits about us when it comes to financial advice offered online, amid a
00:45 rise of social media personalities being dubbed "fimfluencers".
00:50 Influencer is a person who, by virtue of their popular status, can influence the financial
00:54 decision making process of others through promotions or recommendations on social media.
01:00 The thing here is that people are using their celebrity status and their audience to promote
01:05 things that they possibly don't know much about. The problem here is there's a fundamental
01:12 conflict of interest in the fact that they're getting paid to deliver this recommendation.
01:19 The end client effectively is not having to pay any fees, but is probably getting some
01:26 poor advice.
01:27 While an increase in money management content online seems to suggest a rising interest
01:32 in financial education amongst everyday people, not all advice is created equal. With this
01:37 in mind, here's what you need to look out for to avoid falling victim to scams.
01:41 If it sounds too good to be true, it probably is. So that's the first thing. Avoid it like
01:45 a plague. Don't be too greedy. People are greedy and lazy. It's not a very nice thing
01:52 to say, but generally a lot of people are. If they can make lots of money very quickly
01:56 without too much effort, then they will. Of course, everyone will, but it's a false promise
02:00 and it's not something that's really going to come to fruition in most cases.
02:05 Many of the influencers, some are knowledgeable, but many are not. They don't have the expertise.
02:11 They're certainly not regulated. There's no comeback on them if they make a bad recommendation.
02:16 But what is being done to stop these influencers in their tracks? Regulators are attempting
02:21 to crack down on those who recklessly promote investment or trading opportunities on social
02:26 media platforms. But experts like Paddy believe regulators need to be given more power.
02:31 The regulators globally are pushing harder to try to control this sort of new industry
02:38 that's there. It's very difficult because they're all over the world. They might not
02:42 be in the country. It's difficult for a UK regulator to regulate someone who might be
02:47 in another country, etc. So it is a very tough job. But I think the regulators need to take
02:53 this by the scruff of the neck and be very strong. Start fining people serious amounts
02:57 of money for poor behaviour, and that will hopefully start to discourage others.
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