Professional Adviser recently published the findings of a CFA Institute report into financial influencers, or “finfluencers”.
The report found that worrying numbers of Gen Z (those born between 1997 and 2012) are turning to social media for financial “advice”.
Online content is replacing traditional advice in part due to a lack of financial literacy. However, the lack of definite frameworks, missing risk warnings, and minimal accountability on platforms like TikTok and Instagram could prove a huge problem for those receiving this financial content.
If you’re looking to pass wealth to your children, their exposure to finfluencers could be bad news for your money too.
Keep reading for a closer look at the study and how intergenerational planning can ensure the younger members of your family get the money advice they need.
The report reviewed the content provided by finfluencers on TikTok, YouTube, and Instagram
The report analysed content on in the United States and some parts of Europe (including the United Kingdom, France, and Germany).
Of the content reviewed:
- 45% offered general information and guidance but stopped short of making recommendations
- 36% included promotions for specific investment products
- 32% included recommendations for a specific action or product.
The report also found that only half (53%) of content containing a promotion included necessary disclosures. Worse still, these disclosures dropped to just 20% for content containing a direct recommendation.
Rhodri Preece, CFA Institute senior head of research, confirms that “Finfluencers now play an increasingly significant role in educating young people about finance with accessible content that is both informative and engaging.”
But he goes on to confirm that “finfluencer content often lacks sufficient disclosures… and some investors may be unaware when and how finfluencers are being paid to promote financial products.”
The “Great Wealth Transfer” makes receiving professional financial advice more important than ever
Back in 2021, Barclays estimated that a total of £327 billion will transfer to younger Brits over the next 10 years. It dubbed this the “Great Wealth Transfer”.
If you’re looking to pass money on to your children, you’ll want to know that your hard-earned wealth is in safe hands.
Here are three factors to consider.
1. Understand that you and your children might share different money values but be open to talking about them
Our attitudes to money are generally formed when we are young. This means that we might inherit traits and views similar to those held by our parents. We could be influenced by their spending and saving habits, say, or by the amount of household wealth we experienced growing up.
Gen Z has grown up in a different time. The dawn of the internet has brought 24/7 news to our fingertips, alongside social media, and the rise of influencers. This generation also experienced the 2008 global financial crisis at a formative time in their relationship with money.
Your children’s experiences could mean they have formed different money habits and differing views could lead to a clash. In fact, Professional Adviser reported in 2023 that 32% of baby boomers were reluctant to pass their wealth to someone with attitudes to money that veered from their own.
Communication is key. Discuss your different views and the reasons behind them and be prepared for compromise on both sides.
2. Pass on valuable money lessons, including the importance of professional, regulated advice
During your life and career – and through your relationship with us – you’ll have picked up some financial wisdom. Now is the time to share it.
From the value of money to saving v investing and the dangers of debt, these are valuable lessons we all need to learn.
One of the most important lessons to pass on is the value of financial advice.
You’ll know from working with us that having a long-term financial plan aligned specifically to your goals and circumstances can provide financial and non-financial benefits. These include money confidence but also a sense of control and peace of mind.
This partly comes from knowing that you’re working with Chartered financial professionals, operating ethically within strict regulations. Doing likewise and avoiding the often trend-chasing advice on social media, gives your child the best chance of achieving a secure financial future.
3. Consider giving while living so you’re still around to offer guidance
Giving a living inheritance means that your children might receive financial support from you at the time they need it most. It also means you’ll still be around to help them make your money work for them.
You might offer help when they’re just starting out in their career, looking to buy a first home or starting a family.
By making the most of HMRC gifting exemptions like the £3,000 annual exemption, you can give money away tax-efficiently, while also lowering the value of your estate for Inheritance Tax calculation purposes.
If you want even more control over how your money is spent, you might consider putting funds into a trust. These can be complicated but we’re on hand to help. Be sure to get in touch if you think this might be the right option for you.
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Contact us now to find out how our Chartered financial planners could help you.
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