Financial influencers, or Finfluencers, have grown in popularity with the incredible ease and accessibility of social media. As of late, investors who are unable to afford an advisor (think young couples or millennial professionals) are finding investment advice while scrolling through their favorite platform. With TikTok videos only 60-seconds long, Finfluencers are capturing our attention with quick, savvy-sounding financial advice we’d never be able to afford otherwise.
Sounds great, right?
Before making changes to your portfolio based on what you see online, pause to consider a few reasons why it may be best to leave social media out of your portfolio.
Reason #1: Anyone Can Post (Just About) Anything
In a matter of minutes, anyone can create an account on Reddit, TikTok, Facebook, Instagram – any social media platform. From there, users can, of course, connect with others and share content. Whether they’re qualified to discuss the subject matter they choose to share is irrelevant.
While this isn’t a big deal in most cases, it creates a critical issue when those who are unqualified to provide investment advice choose to do so online.
Before following Reddit’s hottest financial guru, ask yourself a couple of questions first.
What’s the source? It’s important to know where the person is getting their information from. Is this based on personal experience alone? Maybe they’re simply reiterating something they read elsewhere. It can be hard (or impossible) to verify where an individual is getting their information from and what credentials they have to provide it.
What’s their motivation? Just like any other content creator, there’s typically a reason (usually monetary gain) as to why someone works to become an influencer. In most cases, Finfluencers are not simply there to provide free investment advice to strangers.
If it feels “too good to be true,” it likely is. They may be trying to promote a product or even boost their own investments by encouraging others to put money towards certain stocks. If you aren’t paying someone directly for their financial advice, consider that they are finding a way to get paid elsewhere – and it’s likely not in your best interest.
Reason #2: Online Advice Isn’t Personalized
If you’re feeling sick, would it make more sense to see a doctor or look up your symptoms online? A doctor knows your medical history, can look you over and address your specific concerns. Finding articles online can provide generic advice, but you can’t get personalized recommendations as you would when speaking to a professional.
The financial advice touted by influencers on Tiktok is intended to apply to the general viewing audience. But what works for some may not necessarily work for you.
That advice shared online doesn’t take into account your own comfortability with risk, long-term goals, values or financial standings. Without the ability to do the research yourself or talk to a registered professional, you become fairly limited in the information you can use to make important financial decisions.
Reason #3: It’s Hard (Or Impossible) to Ask Questions
Have a question on the latest video by a Finfluencer? Good luck getting an answer longer than a quick comment – if you receive an answer at all.
The nature of investing is complicated. It’s natural to want to dive deeper into the “why” behind investment advice before putting your money towards it. But without the ability to ask questions or conduct further research, you’re again limited to high-level advice without the backing to prove its legitimacy.
What Can Investors Do Instead?
Are you willing to take someone’s word for it when deciding where to invest? How about when that someone is not a registered professional?
With a resounding “No,” your next step is to find a solution that can provide the research backing you need to feel confident in your investment decisions.
Dialect is an AI-powered data analysis platform that allows DIY investors to bypass the online investor forums and financial influencers sharing unregulated advice.
How? By using a natural language software that makes it easy and simple for anyone to conduct investment research. Ask questions – as specific or complex as you want – and Dialect automatically sorts through thousands of stock options and sales in an instant. If you aren’t sure what to ask, it offers preset questions, alerts and data dashboards to help get investors started.