00:00Social media is a major source of financial information for young people.
00:04For example, in the United States, close to half of Gen Z investors said they learned about investing and finance
00:12this way.
00:13Many Finfluencers break down complex financial jargon into easily understandable concepts.
00:19They tell relatable stories about things like clearing credit card debt, and the advice is accessible whenever people need it.
00:27But some aren't licensed financial experts.
00:30The advice can be just what works for them, which doesn't necessarily work for everyone.
00:35And some have hidden motives, such as selling get-rich-quick schemes.
00:40Now, a survey from British bank TSB found that 59% of respondents, so around 6 in 10 who acted
00:48on financial advice they got from social media, have since regretted it.
00:52Another bank, Barclays, found that more than 40% of people who invested based on social media advice had lost
01:00money.
01:00The UK's financial authority is leading an international crackdown into legal Finfluencers putting consumers' money at risk.
01:09There have been several arrests and many posts taken down.
01:12And even high-profile celebrities have faced scrutiny over financial promotions.
01:17A few years back, Kim Kardashian was fined almost $1.3 million by the U.S. Securities and Exchange Commission
01:26for touting a crypto asset on her Instagram page without disclosing that she had been paid to do so.
01:32And in the United Arab Emirates, financial influencers now need a license to create certain types of financial content on
01:41social media, part of a push to raise standards and protect investors.
01:46Well, let's get more on this. Jasmine Bertels is a personal finance expert and founder and director of Money Magpie.
01:53Jasmine, thanks for joining me.
01:54Why do you think that people are trusting internet personalities over conventionally established expert voices?
02:03Well, as you said yourself, we're talking mostly about the youth, the younger people who've been brought up on social
02:10media.
02:10They take it, they're not really watching television, they're not reading newspapers or magazines.
02:15They're getting most of their information from their phones and in particular from social media.
02:21So it makes sense that they would trust those people that they see on a daily basis through their phones
02:28and what they say to them.
02:29And as you've pointed out, much of the information is given in a very accessible way.
02:34It's in bite-sized chunks, it's friendly.
02:37Quite often you'll have somebody who's the same age as you, doing the same sort of things as you,
02:42and they're saying, oh, I've done this and it's worked and I've done that and it's worked.
02:45So you think, oh, well, if that person's done it, it must be good for me.
02:48So it's very easy for them to be influenced, frankly.
02:53Are they oversimplifying what are complicated financial decisions, though?
02:59Sometimes yes, sometimes no.
03:01I think there's a broad spectrum of influencers.
03:05It goes from the mumpreneurs or money-saving mums who do things like cash stuffing,
03:13which is a good way of budgeting, using cash, having envelopes.
03:19And there are some good ideas there through to people who say, I put my money into this,
03:25and in six months I doubled my money, you know, this sort of thing.
03:28And that's ridiculous and dangerous and obviously, well, I say obvious, it's not obvious to everyone,
03:34but as far as I'm concerned, obviously should not be followed.
03:38So I think, yes, because of the nature of social media, it is bite-sized chunks.
03:43It works for some things, particularly the simpler day-to-day budgeting sort of ideas.
03:48But when it comes to more complex things, like investing, and most investing is a bit more complex, frankly,
03:54even your basic ISA investing and pensions, there are lots of complexities to it.
03:59You can't just say, oh, here you are, here's sort of a two-second idea, go and do this and
04:06make money.
04:07So the UK's Financial Conduct Authority is trying to crack down on this,
04:11and we also talk examples of what some other countries are doing.
04:13What do you think has to be done to make sure that people's money isn't being put at risk?
04:19Well, it's a very good question, because on the one hand, it does sound sensible to do what they're doing
04:24in the UAE
04:26and actually get people to be licensed.
04:28But then there are also quite a lot of sensible people who've been doing this for years,
04:34and they might not have a qualification, but they do know what they're saying, they know what they're doing.
04:38So it would be difficult, in a way, to know who should be licensed, who shouldn't,
04:43unless it's just financial advisors, in which case people in this country, even older people,
04:50are like, oh, financial advisors, and I'm not sure that they would be listened to.
04:54However, it would be good for people generally to be educated into how to approach information generally.
05:02I mean, what I say to people is take information from different sources, triangulate the information.
05:09This is not just financial, but political, news, health.
05:14There's information coming at us from all over the place,
05:17and just because it's in the mainstream media, for example, doesn't mean that it's true.
05:21Just because it comes from our government doesn't mean that it's true, and we learned this during COVID.
05:26So why not keep looking at social media, but do it with an open mind and do it with a
05:31critical mind,
05:32and think, well, that might be true, but let's have a look and see what other people are saying,
05:37and make your own mind up.
05:39I think that's where we're at nowadays with the news generally, and certainly when it comes to money.
05:44Yeah, one thing that is encouraging from this is the fact that young people are becoming engaged with their personal
05:51finances.
05:52Is this something that perhaps schools should be taking on and teaching people from a young age how to be
05:57responsible with this?
05:59Oh, very much so.
06:00Gosh, yes.
06:01I mean, that was what I was thinking when I was listening to your report.
06:04I mean, if we had even basic information being given in schools, proper, sensible information,
06:13and frankly, we're all singing from the same hymn sheet, those of us who are doing our best to teach
06:17people properly how to manage their money.
06:21There are very few ideas that people have that are different.
06:24We're all basically saying the same thing, spend less, save more, invest regularly, you know, this kind of thing.
06:31And if we got these basics at school, then it would be much harder for the bad actors to persuade
06:40people into the wrong areas.
06:42It really is important that we get financial education, and I'm really hoping that it's going to happen in this
06:48country soon.
06:49It's been talked about for decades, literally decades, and still it hasn't been done.
06:54But hopefully it will soon, and more people will come out of school able to function as a proper adult
07:03when it comes to their finances.
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