By FintechOS · October 17, 2022
5 minute read

TikTok financial advice: that’s a thing

TikTok financial advice: that’s a thing | FintechOS

TikTok, the social media platform driven by short videos, has surprised just about everyone in recent years, not only with its popularity and viral trends, but also in the ways it’s substituting things we thought couldn’t be substituted. One unexpected way the platform is being used is to offer financial advice – yes, really.

Recent studies have shown that more and more people are relying on social media for their news. According to The Guardian, 7% of UK adults get their news from TikTok. This is up 6% from 2020, so the growth is coming along quickly.

Why is this happening, you might ask? For many, it seems painfully obvious that platforms like TikTok are purely for entertainment and not for imparting important life decisions. Yet, it comes down to the unpolished approach on platforms like TikTok. Today’s typical online user is bombarded with adverts and is seeking a more-organic approach, where they don’t feel they are constantly being sold to.

While it’s hard to pinpoint a specific number, it’s estimated that we see up to 10,000 ads per day online, so it’s easy to see why people seek a less salesy approach. The problem is, things aren’t always what they seem on social media, and often we’re even being sold to when we don’t really notice it. This comes down to the cleverness of content creators.

Influenced financial decisions?

It seems troubling that people are turning away from official information sources for their news. Millennials and Gen Zers have a special relationship with so-called ‘influencers’, individuals on social media platforms with significant followings who work with brands to make money – and in the act of doing so, influence people’s decisions.

It’s one thing to trust influencers on topics such as holiday destinations, clothing brands, home decor, recipes, and beauty supplies, but should people be turning to them for financial advice?

This may be a moot point. A survey conducted by Credit Karma found that 26% of millennials and 52% of Gen Zers are getting their financial advice from TikTok, and even more are turning to other platforms, like Instagram, for the same help. Could this be due to an error in user judgement, or are social media platforms changing?

TikTok is changing social media

People are increasingly turning to social media for more than simply keeping in touch with family and friends and sharing memes. Social platforms will always offer these, but now we see support for mental health, for new businesses, for new parents, and so on. Platforms, when used correctly, can be a force of good with a purpose.

Yet, the road to hell is paved with good intentions, and even influencers or profiles with the best of intentions could cause damage to people’s financial situation. Likewise, some TikTok financial “experts” may be biased towards a brand they’re working with, may let their personal experiences affect the advice that they give, or simply may not be qualified to advise in the first place.

The point is that financial advice found on TikTok can’t be guaranteed, and so users should be wary. We wouldn’t be likely to take financial advice from a stranger, so why is scrolling for the same advice any safer? YouTube is full of videos of qualified financial advisers reacting to bad TikTok financial advice, which should be a cause for concern.

How trusted financial institutions can take the reins on TikTok

The only way for qualified financial advisers to help in this situation is to get in on the game. Many professional businesses struggle to find the confidence to enter the social space, especially the likes of TikTok, sticking more closely to their comfort zone – namely LinkedIn and Facebook. Yet, if the people are turning to TikTok, so too must financial institutions.

The only way to fight the spread of misinformation and bad advice is to provide a space with quality information within the platform where users can get safe, real information. This problem provides a unique opportunity for willing brands to create their own persona in a relatively untapped arena, as not many financial firms have made the foray onto platforms such as TikTok.

The beauty of TikTok is that it’s easy to use, so making engaging videos that give people accurate information and sound financial advice is straightforward. In fact, users likely aren’t looking for highly polished, ad-heavy content. They want sincere advice that’s relatable and at most, mildly entertaining. Firms simply need to find a willing adviser who isn’t overly camera shy to put together tips and advice, record them, and then social and marketing teams can upload the video to TikTok. A certain amount of strategy and planning would be involved, of course, but not nearly as much as firms might fear.

A duty to customers

Any financial institution that prides itself on supporting customers with their journey to financial success has a responsibility to help those that may be getting bad or inaccurate advice. Having a forum on TikTok could help people avoid financial problems or even ruin, in especially unfortunate situations. As a knock-on effect, it could expose financial brands to customers that they previously had no way of getting in front of, which shouldn’t be dismissed.

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