Nearly 8 in 10 Millennials and Gen Z Get Financial Advice from Social Media

According to a recent PYMNTS Intelligence report, titled “The New Challenges Facing Finance: Algorithms, Finfluencers and the Quest for Reliability,” 79 percent of millennial and Gen Z consumers look to social media for financial advice. Platforms like TikTok are not only seen as social spaces, but hubs for financial literacy, where easily accessible content makes complex concepts more clearly understood.

62 percent of Gen Z consumers now view TikTok and other social media platforms as valuable resources for financial knowledge. This has led to a rise in the appeal of “finfluencers,” or digital personalities who offer financial advice. Gen Zers report being influenced by their content, but critics warn that it could lead to scams, raising questions about the credibility of online financial guidance.

The urge for regulatory oversight has increased as the online financial landscape grows. The United Kingdom’s Financial Conduct Authority (FCA) is targeting finfluencers, primarily focusing on their misleading financial advice and deceptive promotions in an effort to protect consumers from financial harm.

Some finfluencers have leveraged manipulated success stories to entice followers into financial scams that result in significant consequences, often leaving consumers in severe debt. The need for regulation highlights how crucial consumer protection is and the risks associated with online financial advice.

Financial institutions are changing their roles with the evolving landscape, as 53 percent of U.S. retail banking consumers now look to their banks for financial guidance.  Banks have also been leveraging partnerships with fintechs to give consumers a more tailored banking experience.

To stay relevant in a market oversaturated by social media, banks must focus on transparency and accuracy in their communication. It is also critical that financial institutions move away from one-size-fits-all solutions and combat misinformation.