You may be tempted to turn to social media for free financial advice by bold claims of boosting your retirement nest egg or substantial guaranteed investment returns.
But blindly taking money advice from online content creators could cost you thousands of pounds, new research by High Street bank TSB warns.
It is urging people to beware of so-called ‘finfluencers’ – or financial influencers – who pop up on Instagram, Facebook and TikTok. And while younger generations are more than twice as likely to trust social media tips, parents and grandparents are being also reminded that all may not be as it seems.
More than half of adults who have made financial decisions based on social media advice have lost money, according to TSB. Some 31 pc who use social media have acted on financial advice they have seen – and 55 pc of them have lost money as a result, it found.
While some finfluencers may share correct information on how products such as Isas work, or dish out savvy budgeting tips, others spout illegal financial advice and misinformation to followers, and plug high-risk or fraudulent crypto ‘opportunities’.
Have you lost money to social media tips? Contact [email protected]
For example, one content creator could claim they have a super algorithm that makes them a great trader and they can send you their trading system in exchange for a fee.
But Financial Conduct Authority (FCA) rules state that you must be authorised to do this.
Last month, the FCA cracked down on finfluencers and asked for 650 items to be deleted from social media. The watchdog’s operation led to three arrests in the UK.
On average, those who lost out due to advice from unqualified content creators ended up down £3,706, TSB says.
Jenny Ross, of consumer group Which?, said: ‘Having a large following on social media doesn’t mean that someone can be trusted to give financial advice.
‘In the worst cases, they may even be promoting scams.
‘Take the time to carefully consider any financial decisions, and don’t allow yourself to be pressured by what you see online. Always keep in mind that if an opportunity sounds too good to be true, it probably is.’
The high cost of financial advice may turn many to look at the information on mortgages, investments and retirement plans promoted by unqualified online finfluencers.
Neil Rayner, head of advice at wealth manager True Potential, says, ‘Financial advisers are regulated and there’s a reason why. There’s a level of qualification that goes into that.’
Often videos and posts showing financial tips are unsolicited and arrive as promoted posts in social media feeds.
TSB found more that four in five people who use social media have seen financial advice content they weren’t searching for.
Surina Somal, director of everyday banking at TSB, says: ‘While there could be useful sources of financial advice on social media platforms, there are also pitfalls through incorrect information and unregulated investments that could derail your finances. It’s important you verify the content first to ensure you’re making safe and informed choices.’
Any investment opportunities or products on social media could be a scam – use the FCA’s register to check if the firm is legitimate or not. See register.fca.org.uk/s.
Have you lost money to social media tips? Contact [email protected]
