Tuesday, February 20, 2024
New research from First Merchants Bank has revealed that almost a third (31%) of Americans aged 18-24 preference is to take advice on financial issues from celebrities and influencers via social media channels.
Platforms such as Twitter (X), Instagram and TikTok are increasingly being used by younger generations for information. People can search for information and find a plethora of user generated content, offering advice on all manner of topics.
While both the internet and social media can be a hub of valuable and accessible resources, there is a risk of this content becoming a replacement for regulated information from trusted banks and independent financial advisors.
Taking financial advice from unregulated celebrity influencers may not be the wisest choice, and there are several reasons to exercise caution in doing so, according to First Merchants Bank’s Director of Omni and Digital Banking, Jeremy Tankovich:
- Lack of expertise – While influencers may create engaging content that viewers enjoy, they may not have formal education or expertise in finance. Financial matters can be complex, and advice from individuals without proper qualifications may lack the depth and accuracy needed for sound decision-making.
- Potential conflicts of interest – Celebrities and social media influencers often endorse products or services as part of their brand partnerships; this is ultimately how they get paid. This may lead to biased recommendations that serve their sponsors’ interests rather than the financial well-being of their audience.
- Risk of misinformation – Are you sure the information provided is accurate? There’s a lot of misinformation out there. Financial information shared on social media platforms may lack proper vetting and fact-checking. Influencers might unintentionally spread misinformation, contributing to financial decisions that could negatively affect you.
- Short-term trends vs. long-term planning – Similar to fad diets and the latest trends, celebrity influencers may focus on short-term strategies that align with their public image. However, sound financial planning requires a long-term perspective, considering an individual’s financial goals and needs, their risk tolerance, and the current market conditions.
- Varied financial backgrounds - Celebrities or online influencers may have unique financial situations that may not apply to the public. With the creator industry now valued at $250 billion, some of the biggest social media influencers bring in as much income as movie and rock stars. Following their advice without considering your individual circumstances could lead to inappropriate financial decisions.
- Limited accountability - Unlike regulated financial professionals who work in your local bank branch, celebrity influencers may not be held accountable for the financial outcomes of their advice. No regulatory body oversees their recommendations, which can leave followers vulnerable to poor guidance.
- Emphasis on entertainment over accuracy - Social media platforms prioritize entertainment and engagement, looking to encourage likes, follows and new subscribers to their channel. Financial advice from celebrities or influencers may be geared towards capturing attention rather than providing comprehensive, accurate, and personalized guidance that will help your unique situation.
- Changing Circumstances - Financial situations are dynamic and can change rapidly. Advice that was suitable for a content creator at one point in time may not be relevant or applicable to your current specific circumstances, especially when considering interest rates and the strength of the dollar.
‘‘While some influencers genuinely aim to provide valuable insights, it's crucial to approach financial advice critically as we currently do for healthcare advice, especially when you are searching online’’ explains Mark Mathley, Vice President and Workplace Banker at First Merchants.
First Merchants research also revealed that less than half (49%) of young Americans felt confident when managing their personal finances. Reflecting on this, they urge the public to seek financial information and advice from regulated sources.
‘’For important financial decisions, consulting with qualified financial professionals, such as your local bank branch, ensures a more reliable and tailored approach based on your own specific needs and goals,’’ Davonte Butler, Columbus, Ohio Banking Center Manager concludes.
*These findings were sourced from a survey of 1000 18–34-year-olds who graduated from high schools in the states of Michigan, Ohio, Illinois, and Indiana. The data was collected between 1st - 11th September 2023.
