“Ins” and “outs” of 2024 are still trending on social media, and we’re adding one more — traditional banking advisors are out, and financial influencers, or “finfluencers” are in, suggests a new report published earlier this month by the CFA Institute’s Research and Policy Center.
Gen Zers who took part in the study told the CFA Institute they trusted financial influencers more than professional advisors for several reasons, including that creators are accessible at all hours of the day and offer advice at no cost by posting videos on platforms like TikTok and YouTube.
Financial influencers are also benefiting from the rising consumer demand for longer-form online content. These creators usually need more than 30 seconds to explain complex topics, such as which investments to make and bonds to buy.
“Gen Zers actually have a slight preference for engaging with financial information that is delivered on a mobile-first technology-driven interface as opposed to the traditional human-led advice approach,” Rhodri Preece, senior head of research at the CFA Institute, told Business Insider.
The CFA Institute conducted interviews with targeted focus groups with 32 Gen Zers across five markets — the US, the UK, France, Germany, and the Netherlands — that looked at the participants’ attitudes and preferences toward investing.
Here are four reasons “finfluencers” are heavily impacting young people’s investing decisions:
1. Distrust in traditional financial institutions is driving Gen Z to more ‘relatable’ advisors
Most participants reported being skeptical of traditional banks and personal finance advisors. They boiled it down to concerns that advisors might not act in the best interests of their clients because they think those who work for financial institutions want to make a profit for themselves.
The Gen Zers in the study found social-media personalities more relatable because of their age, ability to easily break down certain concepts, and because the influencers could be found by searching for specific tips on platforms like TikTok.
“Many of them told us they just prefer going online rather than going into a bank and seeing a human advisor because there’s a wider range,” Preece said. “On the internet, you can find someone your age, or [who] shares your background, and you’re much more likely to trust that person.”
2. Longer-form content is hot right now
Platforms, including the short-video app TikTok, are now focusing on longer videos, stemming from online audiences’ preferences to tap into more educational and informative content. Preece said the rebound of long-form content suits the needs of financial influencers because they can take 10 minutes to explain a concept instead of 30 seconds.
“There’s more time for an audience to really digest the information and reflect on it, because most financial topics are complex,” he said.
He also said more time in a video allows the creators to better allow for proper disclosures and disclaimers — if, for example, a creator is earning affiliate money from followers who use their link to apply for a new credit card or invest in a new type of bond.
3. Young people want more information on unregulated assets like cryptocurrency
Most financial influencers specialize in providing information on very niche, complex topics like cryptocurrencies because they understand their audiences most likely weren’t taught them in school or by their family.
According to a CFA Institute report published last year, Gen Zers are the most likely age range compared to other demographics to hold cryptocurrency, so Reece said content on this type of investment is a crucial reason finfluencers are making such strides.
4. Accessibility and lower costs are driving financial content’s popularity
The focus-group participants told the CFA Institute they often view content from finfluencers in their free time instead of setting time aside like they would to make an appointment with a banker or personal advisor. Gen Zers also said they loved that the financial tips on YouTube, TikTok, and Instagram were free.
“Young people don’t want to pay for advice, so that’s one of the driving factors,” Preece said.
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