Destination TikTok For Wealth Managers? Here’s The Primer On How And Why

The extent to which young investors rely on social media and online influencers for financial advice may alarm some money managers, especially Gen Xers and Boomers. There is valid reason for this concern. Older advisors who didn’t grow up with social media are especially aware of how ripe it is for abuse. In fact, 95,000 people reported collectively losing $770 million in 2021 due to fraudulent activities initiated on social media platforms.[i]

Still, the trust young investors have in social media is undeniable. Rather than fighting this fact, money managers would be wise to embrace these platforms in the same way that major financial brands have, and develop engaging and informative content for young investors.

A preferred channel for advice

Several surveys have demonstrated how much trust Millennials and Gen Zers have in social media.

According to a January 2023 survey conducted by Forbes Advisor, 79% of Millennials and Gen Zers reported receiving financial advice from a social media source.[ii]

According to a survey by CreditCards.com, Gen Zers are five times more likely to get financial advice from social media than older generation investors.[iii]

Social media platforms are beginning to displace most major search engines. A survey of how Gen Zers found lunch recommendations offers a hint of what’s to come. Today 40% youth use Tiktok or Instagram instead of Google
google
for that information.[iv]

The Rise of the “Finfluencer”

Young investors love to connect with celebrities on social media. Digital creators who provide financial advice – the new breed of “fininfluencers” – have built massive audiences. Popular creators offering valuable lessons on money management and investing basics include Humphrey Yang (@humphreytalks), who has 3.3 million followers on TikTok, and Delyanne Baros (@DelyanneTheMoneyCoach), whose TikTok videos have garnered 3.6 million likes.

These influencers have earned a fair amount of trust. Another survey found that 37% of consumers overall trust social media influencers more than brands, and Gen Xers and Millennials are twice as likely to trust influencers than Boomers.[v]

Big financial brands have adopted TikTok

Some of the best-known names in financial services have acknowledged that TikTok is much more than a site where Gen Xers go to watch dance and lip-syncing videos and catch the latest viral trends. brands like blackrock
Black
And Fidelity Investments is now on this social media platform, and they’ve shown that they understand the sentiment. They’ve been posting short-form videos in which young members of their staff explain fundamental concepts such as what bear versus bull markets are, what a Roth IRA is, and how 401(k)s work.

Follow best practices for engagement

As wealth managers make their presence felt on the social platforms preferred by young investors, they are likely to get more engagement if they follow the general rules of developing compelling content on these sites.

, Post regularly. More people will engage with your content if you post regularly. Ideally, you’ll want to publish daily or at least several times per week. If you’re ambitious enough to get started, try posting new content at least once per week. Use the “appointment TV” mindset of scheduling at a set day and time. That way, your audience will know when to look for new content.

, Make it interactive. Younger generations don’t just want to be passive recipients of content. They also want to weigh in. While compliance rules in a regulated industry like financial services make this more complicated, any interactive element that regulations and your compliance department can allow—such as polling—will help generate more engagement.

, Tap on Your Younger Staff. Like members of any age group, young investors like to connect with people they can relate to – and that often means members of their own generation. Big brands have been wise to take advantage of the younger members of their workforce. They post informal educational videos, often recorded while sitting at their office desks. His tips and insights are delivered in simple, jargon-free language that anyone can understand.

, Make it personal. Everyone can provide “Investing: 101” information. It is much better to personalize the content. Anyone with a unique voice and talent for delivering financial and life lessons in creative and less traditional ways will build a following. Posters should share their experience learning financial basics and even making beginner mistakes. Celebrate milestones, such as reaching a savings goal, and invite followers to do the same. Personal anecdotes will connect with the content creator and keep coming back for more.

trendsetters who will control the money

Given that the oldest Gen Zers are still only 26, some advisors, who are already under pressure for time, may not believe that this age group controls substantial assets, yet too much for them. deserves more attention. But there are three good reasons not to make that assumption. First, in today’s era of entrepreneurship and with the rise of many digital creators, many of these young investors have already accumulated significant wealth. Second, this group tends to inherit large amounts from their parents and grandparents, and connecting with them early may enable advisors to reduce their tendency to lose clients as wealth transfers across generations. Finally, younger age groups are often early adopters of major trends. The social media preferences and habits they display often carry over to older generations, once they have had time to discover the merits of trends quickly recognized by younger generations. The lessons that money managers learn from engaging with younger clients and prospects will almost inevitably apply to all generations of investors.

Reference:

[i] Source: “Social media is a goldmine for scammers in 2021,” Federal Trade Commission, 1/25/22

[ii] Source: “Nearly 80% of Young Adults Get Financial Advice From This Surprising Place,” Forbes Advisors, 1/23/23

[iii] Source: “Poll: Most Americans learn about finances from friends and families; But Many Gen Zers Rely Too Much On Social Media For Advice,” CreditCards.com, 4/5/21

[iv] Source: “Gen Z uses TikTok like Google, upsetting the old internet order,” bloomberg.com, 7/29/22

[v] Source: “More than a third of consumers trust social media influencers over brandsAgility PR Solutions, 3/3/23