TikTok and Instagram have made personal finance great – the trick is finding the good stuff

Nathan Kennedy adjusts his home studio where he creates financial content for his social media channels, in Hamilton, Ont., on March 17.Christopher Katsarov/The Globe and the Mail

Delivering entertainment and helpful money advice in a 60-second video clip is a tall order. But that’s exactly what TikTok phenom Nathan Kennedy does for a living.

The 25-year-old Hamilton-based former PepsiCo district sales leader has nearly 411,000 followers on TikTok and a strong audience of 32,700 on Instagram. And he’s not selling cryptocurrency schemes or bragging about quick wins in the stock market to generate clicks and likes.

Instead, visitors to Kennedy’s feeds will find sketches on topics like salary negotiations, index investing, and even a few clips on something as bland as Canada’s tax system. In a video, Mr. Kennedy debunks the common misconception that earning $49,000 a year is better than earning $50,000. But he uses the popular TikTok format of having a conversation with himself. A red-shirted Mr. Kennedy explained to a gray-shirted Mr. Kennedy that the first $49,020 of income is taxed at the federal rate of 15 percent. Only every dollar above that threshold, up to $98,040, is taxed at 20.5 percent (using 2021 tax rates).

While the video doesn’t capture every nuance of how Canada’s federal tax brackets work, it is an example of how social media content can make the basics of financial education not only accessible but also fun to watch. Bloggers and YouTubers have been creating down-to-earth, financial-friendly content since long before the pandemic. But financial advice on platforms like TikTok and Instagram exploded as COVID-19 restrictions and a 21-month stock market rally drew dozens of Gen Z newbies and homebound millennials to the financial markets and seeking information. about online money management.

Of course, a lot of financial advice on social media is wrong or completely fraudulent. But some successful financial influencers, or finfluencers, see themselves as educators who can speak to people and life’s challenges often ignored by traditional sources.

“The goal is to make as many people as possible think finance is cool,” said Haley Sacks, a New York-based self-proclaimed “financial pop star” known as @MrsDowJones. To do that, finfluencers are breaking new ground in terms of how financial information can be packaged.

For example, Ms. Sacks, who has more than 243,000 followers on Instagram and more than 184,000 of them on TikTok, has a video in which she gives brief financial advice while also applying foundation and eyeshadow.

The strategy, she said, was to capitalize on TikTok’s viral trend of short makeup tutorials. He wanted to reach people who wouldn’t be naturally drawn to financial content, but might be interested if it was presented in an identifiable format.

Finfluencers are also addressing issues ignored by the industry at large. Mental health and LGBTQ identity are big issues for 27-year-old Ellyce Fulmore, who has 497,000 followers on TikTok and 13,400 followers on Instagram. The Calgarian, who had $35,000 in student loans and high-interest debt before the pandemic, said her ADHD makes it hard to budget with a spreadsheet and easy to spend impulsively. To help herself keep up financially, she now manages her cash flow by funneling funds into different accounts for short-term and long-term savings and using a reloadable prepaid Visa card.

Although Ms. Fulmore acknowledges that not everyone experiences ADHD in the same way, her audience has been “very receptive” to content in which she shares what financial strategies have worked for her, she said.

Being in a romantic relationship with another woman has also affected Ms. Fulmore financially.

“When my girlfriend and I were looking for a place to rent, we had a really hard time finding a place,” he recalled. The prospective owners seemed uncomfortable with them and insisted on referring to Mrs. Fulmore and her partner as “friends”, even though they had made it clear that they were a couple.

It was an attitude that Ms. Fulmore said she had never experienced when renting and dating men before coming to terms with her queer identity. Eventually, Mrs. Fulmore and her current partner had to increase their rental budget to find a place where they could live together.

“We thought maybe people would take us more seriously if we rented a more expensive place,” he said.

Ms. Fulmore is now writing a book on how personal experiences of discrimination affect personal finances.

Social media also tackles working-class financial issues that advisers often don’t hear from a clientele of wealthier professionals.

Still, finding your way to worthwhile financial content on social media is a challenge in a space that continues to be plagued by scams and dangerously bad advice.

Videos promoting risky options trading to inexperienced investors or where influencers boast of holding large sums in cryptocurrencies, which are much more volatile than stocks, are common. So are so-called pump-and-dump schemes, where fraudsters buy an asset cheaply and promote it on social media to increase its price only to suddenly dump it and cash in on the profits.

The lack of regulation over financial reporting on social media means there are few recourses for victims of fraud or protection for novice investors, said Preet Banerjee, a Toronto-based personal finance commentator who chairs the Canadian Foundation for the Advancement of Finance. of Investor Rights, known as FAIR. Canada. (He did not speak to The Globe and Mail as a spokesman for the organization.)

“We know that people tend to gravitate towards opinions that already confirm what they might believe and we don’t know what their level of financial education is,” said Mr. Banerjee, who has his own YouTube channel with over 100,000 subscribers. “They may have more conviction with some strategy that may not be appropriate.”

Listen to this Stress Test episode on cryptocurrency investing

Opinion: Most Online Personal Finance Advice Is Better Than From Established Financial Institutions

So how can newcomers filter through the mass of financial content from bad to downright ugly and find the best that finfluencers have to offer?

For starters, keep in mind that the biggest social media accounts aren’t necessarily the most credible, said Ben Felix, a portfolio manager at Ottawa-based PWL Capital.

While Mr. Felix’s popular YouTube channel, called Invest with common senseWith 248,000 subscribers, success on social media often involves selling unlikely get-rich-quick schemes, he noted.

“There are personal finance YouTube channels, not to mention TikTok, that have way more subscribers than I do but give terrible advice,” he said.

Another red flag: Videos that entice you to buy a particular stock or crypto token, Felix said.

“You don’t know what goes on behind the scenes,” he said in terms of any compensation or incentives that influencers have been offered to promote the asset to their followers.

There are also more nuanced conflict of interest issues surrounding corporate sponsorships. Lucrative brand ambassador contracts are a major source of income for those in the social media business.

While many of these matches are done in full transparency and involve solid financial products, they still highlight the fact that many social media gurus are not completely independent financial commentators.

All of the influencers interviewed by The Globe said they are very selective about the brands they endorse, adding that they reject the vast majority of corporate pitches and stick to products they already use and like or have researched extensively.

Ms. Sacks, who also offers financial education courses, said her direct-to-consumer online platform, Finance Is Cool, is now her main source of business.

“That gives me the power to say no” to brand endorsements, he said.

Finfluencers who take the long view have an incentive to maintain the trust of their audience, Banerjee said. But even with the best of intentions, they may not always fully understand the financial products they choose to support, she added.

Ultimately, Mr. Banerjee would like to see some light regulatory oversight introduced for finfluencer content. The rules would have to offer some safeguards for consumers without being so restrictive that they shut down the online financial conversation, he added.

In general, verifying all the financial information you collect from social media is a good idea, Kennedy said.

“You have to do more than just be on TikTok,” he said. “You have to do your own due diligence.”

Be smart with your money. Get the latest investment insights delivered directly to your inbox three times a week with the Globe Investor newsletter. Sign up today.

Previous post Billionaire Carl Icahn Predicts a Recession or Worse: Says “There Is No Responsibility in Corporate America”
Next post Natural Gas Liquids (NGL) Market: 45% of Growth Will Originate in North America | Driven by growing government support for NGL adoption
%d bloggers like this: