TikTok and Youtube are the preferred channels of Gen Z when in search for financial advisors.
Financial psychologist warns that searching for financial advice on social media platforms might be disastrous for the financial situation of people in Gen Z (aged between 18 and 25). New survey from Bankrate reinforces that warning, as most users have declared feeling bad about their financial status after watching other people’s posts on the aforementioned channels.
With that in mind, experts are currently trying to explain that drawing the line between fantasy and reality across posts on social media platforms, especially when it comes to influencers, may be a very difficult thing to do, as the presented information is often very different from the truth. This is important due to the uninspired habit of Gen Z investors of taking financial advice from TikTok (34%) and YouTube (33%) posts rather than from a competent, legal financial advisor (24%), marketing firm Vericast stated.
“Young people are listening to financial advice that may be totally inappropriate,” commented Brad Klontz, certified financial planner and financial psychology professor at Creighton University. Bankrate analyst Sarah Foster agrees, while advising Gen Z to distrust social media financial information if aiming to stay out of trouble.
“I like to think of social media as a scrapbook filled with the best parts of people’s lives. That can result in your comparing yourself to an unrealistic portrayal of someone else’s life. […] People may not have stopped to think critically about what they were seeing on social media”, Foster declared.
Brad Klontz also added:
“If I were to gaze into your eyes and hear you talk and you’re looking into my eyes, it creates an intimate connection and a deep sense of trust.
“It’s the way our brain is wired. For 99.9% of human history, if you had that gaze it was intimate. Your brain doesn’t know it’s unidirectional. It creates a false relationship”, he said, while describing the phenomenon called “para-social interaction.”
To sum up, experts warn social media users regardless age to approach this kind of situation critically and don’t just believe anything they see online.
“You may have seen everyone taking vacations this summer, but you don’t know if someone went deeper into debt to pay for it. Realizing that you don’t know the full story is really important,” Foster explained.
In addition, users should remember at all times that financial advice should always be individual, tailored for every person’s specific needs and situation. Similarly, doing their own research on the topics of interest, as well as on the financial advice found on social media channels, might improve the chances of taking a decision they will not regret later on.
“You see posts telling you what stock to buy, but there are reasons a pro won’t do that. If I give that advice, I might change my mind tomorrow, and then where are you? I don’t even know if you should be buying stock at all. […]
“Vet this person who is giving the advice. What’s their background? What are their credentials? Then run the strategy or technique by multiple people, including a credentialed expert and someone who doesn’t make money selling that technique. […]
“People who put on lavish displays of wealth are trying to manipulate you. Plain and simple”, Klontz concluded.