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For stock trading, investment portfolios and savings advice, Gen Z are using social media platforms like LinkedIn and TikTok more than ever, which could have long-term ramifications for trading firms.
According to new data, Gen Z are using social media for financial investment advice more than ever, gravitating toward ‘finfluencers’ to inform their decisions.
A report by CityAM states that young people are leading the way in revolutionising how investments are made, with 70% saying that use social media as a primary source of information.
LinkedIn was labelled the most popular media channel to use, with 46% of those surveyed ranking it at number one. Instagram came a close second at 44%, while TikTok was in third at 43%. Interestingly, Reddit also had a popular vote, raking in 40% of participants.
The data comes from a survey by Charles Schwab, a financial services company.
53% of Gen Z also said that financial influencers (hence the name ‘finfluencers) were important in swaying their investment decisions. This means that social media and word-of-mouth has outpaced traditional financial media, which was narrowly beaten at 52%.
These numbers could be a wake-up call to firms who rely on providing financial advice to maintain their image as industry leaders.
In fact, over 60% said they were more likely to turn to online investment communities when deciding what to invest in rather than well-known professionals. Think subreddit communities, Discord forums, or other platforms that encourage peer-to-peer conversation.
In addition, Gen Z stated that celebrity status and endorsement is important. 44% valued their advice compared to only 36% of millennials.
The rise of ‘finfluencers’ and this type of content has been fiercely debated online, with more regulations likely to emerge to clamp down on misinformation or poor advice.
As is part of the course with social media platforms, anyone can claim to be an ‘expert’ in anything, leading to bogus insights and self-serving financial courses that aren’t genuine.
Social media forums can also cause disruption to the status quo in unexpected ways. Remember the Wall Street GameStop fiasco of 2021? It caused market freefall and worldwide panic on an unprecedented scale.
