Liezel Alsemgeest
For the past few years, a new type of influencer (definition: a person with the ability to influence how others behave because they have built a reputation based on their knowledge and expertise, generally on social media platforms) has emerged.
They are called finfluencers; and as the name suggests, these individuals focus on the niche area of personal finance, investing, and creating personal wealth.
Within this finfluencer social media world, there are also different subsets of individuals that focus on investing, the F.I.R.E (financially independent, retire early) movement, the debt-free community, investing in real estate, frugality, and living sustainably.
Most finfluencers started out on YouTube where they post videos, however, platforms such as Instagram and TikTok have also seen an increase in people posting financially-related content.
These finfluencers range from experts in their field who might focus on, for instance, investing, but also people with no financial background who taught themselves or who share their own finances or personal experiences with their viewers and subscribers.
Younger generations look at YouTube as their learning platform of choice, as someone can find a video on literally any subject on the platform. A recent study found that approximately 19% of Generation Zs (aged between 13 and 27) watch YouTube videos or read blogs of finfluencers to gain more knowledge and insight into financial matters.
Generation Z and Millennials (aged between 28 and 42) make up 60% of the TikTok platform, while 67% of Instagram users are between 18 and 29 years of age.
It is, therefore, clear that younger generations regularly make use of these platforms and use it for learning and information-gathering.
And yes, there is a definite downside to finfluencers and that is that financial novices (or younger consumers) might take personal opinions or sponsored content as advice and make damaging financial decisions.
In my opinion, it becomes dangerous when a finfluencer might, for instance, suggest to viewers or subscribers that investing in a specific share or asset is a good investment or when finfluencers that focus on “investing” in cryptocurrencies, encourage their viewers or subscribers to do the same.
This is a definite concern for the financial services industry.
However – for the most part –content creators are opening a whole new world to younger individuals, and more importantly, to people who have never had the opportunity to learn about things like investing, becoming debt-free, or creating wealth.
Also, there is a definite shift in the personal finance community to start thinking of spending money more mindfully and moving away from over-consumption, focusing on quality, rather than quantity. This, in itself, is a wonderful phenomenon that would definitely stand most people in good stead, especially in these hard times of high inflation, increases in interest rates, and high overall living costs.
In my mind, this is a step in the right direction and even creates opportunities.
I, for one, am certain these finfluencers will never replace traditional financial planning professionals. I base my opinion on two reasons. The first is that most finfluencers focus on one specific area of financial planning or personal finances. Secondly, financial planning is a profession that needs quite a bit of expert knowledge, which some of these finfluencers just do not have in a majority of cases.
As much that can be learned from social media platforms of the basics of personal finances and investing, the financial planning essentials such as risk planning, retirement planning, and estate planning will remain in the hands of financial professionals. I am certain that these finfluencers would rather be complementary to a financial planning professional’s client’s financial journey.
For financial planning professionals, what could finfluencers mean for them? Well, who would not want financially savvy young clients, open to learning, on their way to creating a secure financial future and wealth?
Professor Alsemgeest is the director of the School for Financial Planning Law at the University of the Free State
Cape Times