Observation from Fintech Snark Tank
Should TikTok be banned in the US because it is a national security risk, or should it be banned in retaliation for China’s actions against US companies?
That’s for others to decide. If TikTok gets banned for any reason, many Gen Zers will wonder, “Where can I go for financial advice now?”
Gen Z and Millennials Get Financial Advice on TikTok
How many young consumers turn to “finfluencers” for financial advice on TikTok? The answer depends on the research you’re looking at.
A Vericast survey revealed that 34% of Gen Zers get financial advice from TikTok (compared to 24% who sought advice from a financial advisor). Meanwhile, another study by Current Account Switch Service found that 58% of 14- to 18-year-olds follow him. TikTok Finfluencer.
Who are the top fin influencers on TikTok?
Top influencers on TikTok have millions of followers. who are they?
The most popular are Erika Kullberg, a corporate attorney with 9 million followers, Mark Tilbury, an entrepreneur with 7.2 million followers, and Brandon Schlichter, with 3.4 million followers, and Brandon Schlichter, with 3.4 million followers. Duke Alexander Moore, Certified Tax Attorney. There are also self-taught investors like nursing school graduate Jessica Gurney and former pharmacist Alex Sanders.
According to a study titled What Are TikTok Finfluencers Talking About? How To Make A Million Dollars In 30 Seconds: The Need To Regulate Finfluencers:
“Generally, Finfluencers discuss educational information on topics such as investments, personal finance, credit card debt, 401(k), real estate, and negotiations. Some Finfluencers use the artificial intelligence software ChatGPT. With , we tell our viewers that they can easily become millionaires by doing free labor, like writing a book or making a YouTube video.”
Is TikTok Financial Advice Helpful?
CNBC evaluated the financial advice from some of the financial influencers on TikTok and concluded whether it was a success or a failure.
“Some TikToks offered factual advice in 30 seconds or less, while others were essentially get-rich-quick offers without digging into the details.”
Rebecca Jennings and Emily Stewart wrote to Vox:
“At worst, Finance TikTok perpetuates financial myths, fraud, and dangerously misleading information. , just the experience of one random person who made thousands of dollars buying and selling Tesla calls.”
Why TikTok Financial Advice Resonates
Critics who criticize the financial advice provided by TikTok, especially bankers and registered financial advisors, often do not understand the motivations of TikTok users to view financial-related content on social media issues.
Banks and investment advisors often focus on providing educational content aimed at improving financial literacy, while TikTok’s influencers entertain their audience. And why? A Current Account Switch Service survey found that 40% of respondents were more likely to trust an influencer they found interesting.
Should financial advice on TikTok be regulated?
Ironically, but unsurprisingly, TikTok’s finfluencer critics have been criticized for “prioritizing entertainment over credibility and credibility” and “risky, oversimplified, impulsive It cites making videos that encourage economic decision-making.
But is that really any different from what some conservative brokerages are doing?
Fidelity Investments has launched a metaverse presence called Fidelity Stack. This includes a dance floor, a rooftop sky garden, and a game called Invest Quest. The game “provides a gamified financial education experience in Decentraland.” ETF investment while collecting “orbs”. “
entertainment? yes. Oversimplified? I claim so.
Author Tamra Manfredo How to make $1 million in 30 seconds The study suggests that “finfluencers are also dangerous because of the structure of the social media platforms themselves,” arguing that “misinformation generally travels faster than truthful information.” There is
Nonsense. There is no truth in Manfredo’s statement because no one can 1) measure the speed at which information travels, and/or 2) tell the difference between “information” and “misinformation”.
The crux of the regulatory issue goes something like this: What is the difference between financial education and financial advice?
Many of the top finfluencers claim to offer education, not advice. Is there really a clear difference between the two?
For example, take a look at Fidelity’s metaverse entry, Fidelity Stack. I suspect that Fidelity is providing “education” about ETF investment in order to promote investment in ETFs.
Author Tamra Manfredo How to make $1 million in 30 seconds According to the study, “current SEC, FINRA, and CFPB regulations may be too restrictive for non-professional influencers. because there is.”
However, she went on to say that “these regulations can be adapted and relaxed to effectively regulate unregulated finfluencers,” defining what a finfluencer is. It proposes regulatory language and recommends including a disclaimer notice on FinToks.
Economic impact of TikTok ban
Lost in the political battle over TikTok bans is the economic impact of bans on influencers, and by extension all TikTok influencers.
According to a study conducted by CMC Markets in the fall of 2022, the top five influencers earn between $275,000 and $750,000 annually. When we published it in September 2022, he received a note from two of them assuring him that he was making far more than that (rubbing my face into the dirt how wonderful it would be).
ZipRecruiter reports that the average salary of brand-sponsored TikTok influencers is around $55,000, with some earning over $100,000. Statista reports that he has over 100,000 worldwide, but does not disclose how many brand-sponsored influencers are in the US.
Whatever the numbers, the ban on TikTok in the US will surely put a dent in the wallets of many finfluencers.
Where will Gen Z go for financial advice if the US bans TikTok?
Perhaps a better question is where do finfluencers go and can they take their followers with them.
Instagram seems like a logical place for finfluencers to migrate.
With Musk’s intention to make Twitter a super app, or at least a hub for financial services if not a super app, having an array of influencers on the platform could help galvanize Musk’s strategy. It might help.
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