Data Snack: Gen Z turn to social media for financial advice
- Social media influencers are becoming a popular source for Gen Zers hoping to improve their financial literacy
- At the same time, users admit to taking advice from people they don't know. That's risky -- especially when it comes to advice on where and how to invest.
What do you picture when you think of a financial advisor? Most likely -- it's a person with a nice suit sitting across from you at a nice desk and pouring over your financial files with you.
Just ask Google Images.
But if you’re a Gen Zer, you may be picturing someone else -- a person who isn’t sitting at a desk, and may not even be wearing a suit.
And that’s because the majority of Gen Zers aren’t usually going to these desk-occupying financial advisors for advice -- they’re going to social media.
A study by Credit Karma found that 63% of Gen Zers go to social media to get their financial advice -- these topics range from budgeting and taxes, to crypto and paying back student loans. 77% say they follow specific social media influencers who create content about these topics.
One reason for this generation’s preference is the classic one -- Gen Zers are a digital-first generation and these platforms offer fun, bite-sized material that can be consumed on a mobile device. Then there’s the interactive aspect, which lets users engage directly with the material.
“Learning in this setting is a collaborative, engaging experience, as Gen Z can share their own experiences and opinions, while getting advice from influencers they trust,” Poulomi Damany, GM of assets & tax at Credit Karma. “That makes the learning and advice a lot more fun than reading a book on investing.”
In terms of the most popular platforms for financial literacy among these users, Instagram and TikTok seem to be the top choices. Over half of Gen Zers say they intentionally turn to these apps to get financial advice.
Interestingly, Facebook remains a top choice for millennials looking to get financial advice, but occupies 4th place for Gen Z.
But of course it’s hard to know just how reliable these sources are. Over half of the Gen Zers surveyed in the study said they’ve taken financial advice online from people they don’t know.
And maybe for some of these topics, expertise isn’t as essential -- like budgeting tips, or how taxes work.
But for other topics, like where and how to invest, misinformation can be detrimental.
Still, with TikTok recently partnering with Citizens Advice to create financial literacy advice videos, we may be seeing convergence between social media and financial literacy. The platforms could end up being much more reliable than they are today.
According to Damany, however, we’re not quite there yet, and users still need to be alert when they’re processing information like this online.
“It's great to see trusted consumer education content from impartial voices like Citizen's advice on there. However, it’s important for consumers to do their research to verify the information they receive online is accurate before taking action,” she said.