Nearly 80% of young adults say they turn to social media for financial advice. But perhaps they should find another source.
A new report by Social Capital Markets found that 71% of the financial advice consumed by Gen Z and Millennials is misleading, and only 13% of influencers had the relevant qualifications and credentials to advise on finance matters. This past summer in the U.K., for example, several social media influencers were charged with promoting financial schemes to millions of followers.
The study analyzed 2,470 TikTok, YouTube, and Instagram videos and relevant hashtags (#StockTok, #Investing, and #Stocktips), looking for “misleading” posts that have key items, including no disclaimer, encouraging viewers to invest in specific assets, and implying guaranteed returns.
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Of the videos analyzed, 83% lacked disclaimers and offered “a one-sided view of financial decisions,” per the report. Meanwhile, 57% of stock content implied guaranteed returns.
Social Capital Markets
TikTok, Instagram, and YouTube Had the Most Misleading Posts
According to the report, TikTok was named the No. 1 riskiest platform, with 91% of videos lacking disclaimers and 70% encouraging stock purchases.
Instagram was found to be the second most problematic, with 88% of financial videos lacking disclaimers and 65% encouraging specific stock investments.
YouTube came in as the third platform with the most misleading posts, noted for being “aggressive in pushing specific stock picks,” with 76% of posts failing to include a disclaimer and 75% promoting particular investments.
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Why Was TikTok Deemed the Riskiest Platform for Financial Advice?
In addition to the high number of videos that lacked disclaimers and encouraged stock purchases, the TikTok videos analyzed also had a high percentage (65%) of content that implied guaranteed returns, while 50% encouraged viewers to invest a particular proportion of their income.