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It’s often said that advisors need to be attune to the technological predilections of young generations – namely millennials and Gen Z – but there’s more to the story than simply knowing that these demographics spend plenty of time consuming content via Instagram, Tik Tok and Twitter among, others.
I’ll age myself here and saying watching cat videos on YouTube, or whatever the kids are watching these days, is one thing. Personally, I’m partial to fighter jet videos. It’s probably the result of being a child of the waning stages of the cold war and remembering when the original Top Gun debuted.
Point is for as vile as many parts of social media are, there are still plenty of perfectly harmless ways to waste a few minutes on there, including cat and fighter jet videos. What platforms such as Instagram and Tik Tok are not designed for is dispensing of credible financial advice. I’m purposefully excluding the “FinTwit” section Twitter because there are some great, legitimate follows on there. Perhaps hundreds of them.
However, millennials and Gen Z increasingly turn to social media – the wrong forms – for financial advice. That’s good and bad news for advisors. The bad news is plenty of folks in these demographics need to be talked out of bad habits. The good news is they clearly desire financial advice.
Credible Cause for Concern
Advisors should be aware of the following statistics.
“A 2021 CreditCards.com survey showed that social media platforms or influencers were the second most popular resource for Gen Z for financial advice, with 28 percent using it, behind only friends and family as a resource (53 percent). Millennials relied on social media at a similar rate (24 percent), compared to Gen X and baby boomers at 10 percent and 4 percent, respectively,” according to a Bankrate survey.
Compounding the potential woes of these unwitting investors is the fact that they’re susceptible to essentially all of the same marketing gimmicks as older generations were. For example, the “fake it till you make it” line of thinking is alive and well.
Bankrate analyst Sarah Foster told CNBC that 46% of Gen Z’ers fess up to posting content that makes them look more affluent and successful than they really are. This is akin to some of the ads and videos that popped up earlier this century with penny stock touts showing themselves boarding private jets and their lavish, waterfront homes with extensive collections of exotic cars. Newsflash: All that stuff can be rented for a day.
Advisors have tools to steer younger clients out of these bad habits and those avenues don’t revolve patronizing talk or “get off my lawn” attitudes. Rather, show these youthful investors the folly of worshipping at the altar of fake it till you make it influencers.
A great example – one that I will not provide a link to because he’s unsavory – is Vegas Dave. Vegas Dave isn’t in the world of investing. He focuses on sports betting. He lures subscribers in with pictures of beautiful women, expensive cars and the like – all the things to seduce vulnerable customers. Thing is Vegas Dave isn’t good at sports betting and is universally reviled in the industry.
More Good News for Advisors
Interestingly, the aforementioned Bankrate survey confirms that a majority of those polled do NOT believe social media is a good source of financial guidance and nearly two-thirds say it’s not a trustworthy avenue for the pursuit of financial advice.
“Financial advisors were viewed as the most trustworthy (70 percent) of the sources cited, but advisors were consulted infrequently by Gen Z (only 16 percent), millennials (21 percent) and Gen X (20 percent). In contrast, about 29 percent of baby boomers consulted advisors,” according to the survey.
Those are compelling data points for advisors because they confirm the desire there among younger investors to receive professional guidance and there’s ample room for growth on that front.
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