Because a Million Views Doesn’t Always Equal Good Advice
A simple search of TikTok will bring up an infinite scroll of financial inspiration – to the tune of 50.1 billion views for the #money alone. Filled with advice about money, some practical and others downright criminal, #FinTok (financial TikTok) is filled with landmines.
Just because someone has a million views, doesn’t make them a credible source.
In some cases, finfluencers are people with a large audience and very little financial training. It’s actually a little bit of their power and appeal. They’re every day people, like you or me, managing their money to the best of their ability. But that doesn’t make them qualified to to tell you what to do with YOUR money. They’re pros at creating bite-sized pieces of content, not necessarily giving accredited advice.
Why the alphabet soup of titles (CPA, CFP, CFC, and AFC) matters
True story: our community manager was scouring the internet for the best accreditation program to become a financial counselor. She took to Instagram to ask popular finfluencers: “hey, did you study personal finance anywhere?”
Only one out of the 10 was pursuing any sort of formal training. (Shout out to LiveHappiGirl.)
Why does being credentialed matter in personal finance?
The “C” in CFP, CPA, and CFC stand for “certified” or “chartered”. This means that the certified financial planner (CFP), certified public accountant (CPA), accredited financial counselor, and chartered financial analyst (CFA) are required to pass certification courses for their credentials. It also means their knowledge meets required standards and can be backed up with study.
Does that mean you should avoid anyone not certified?
Not necessarily. But if you avoid your due diligence, it can literally cost you thousands of dollars or land you in prison for tax evasion. Take, for instance, the realtor who said an S-Corp meant you don’t have to pay taxes. Can you reduce your tax burden with an S-Corporation? Yeah, but there’s a whole lot more to know than that.
Things to keep in mind when following finfluencers
Is their unique situation different from mine?
Take each piece of advice as a starting point for you to do your own research in the context of what your financial situation is.
Am I being persuaded by their celebrity versus the facts?
Don’t be persuaded by the number of ❤️’s or views a video has. There’s a lot more that goes into managing money than popular opinion.
Instagram versus reality
As Nick points out in the (TikTok) video to the right, there are a lot of ways to manipulate what you see. Take for instance some of the most popular trends on #fintok: stock picks.
More people than ever before are investing in stocks.
The problem with that? There’s an inherent risk that people don’t realize.
Right now, we’re lucky the market is doing pretty well. In the words of Vivian Tu, creator of your.richbff “A blind monkey with a dart could make money picking stocks in a bull market.”
A bull market is the condition of a financial market in which prices are rising or are expected to rise. The term “bull market” is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, and commodities.
When things go south, when a stock pick loses its value and a follower loses all of their money, what then? Your finfluencer may not be up to date on those SEC regulations. They also may not be intentionally breaking rules that were designed to protect investors.
Pump and Dump
Finfluencers can get swept into the same scams we are. One example is “pump and dump.” This is where the price of a share or stock or cryptocurrency is artificially inflated so that there’s an increase in trading. Once the price rises (pumped), scammers sell the shares at the inflated price (dumped). Look at Dogecoin.
Is this the full picture?
Make sure you have the full picture. If someone tells you they made 20% on a Bitcoin investment in the last week, that could be true. But it could also be the case the price of the cryptocurrency has dropped by almost a third in the last two months.
When you’re looking at the big picture, don’t forget to take a look at the creator’s motivation.
Is this an ad?
Let’s be honest. We’ve all been sucked down the hole of TikTok’s algorithm. But that dark hole is also pretty profitable for the finfluencers who create the content. One of the only ways for creators and social media platforms to make money is through paid promotional content. There are countless cases of finfluencers making $500,000 a year because of this phenomenon. The thing to keep in mind is that financial influencers are probably incentivized by views and clicks, not by your financial outcomes. If they’re suggesting you consolidate your loans with a particular brand, take a deeper look, and stay skeptical.
Why it’s totally justifiable to turn to social media, instead of your parents:
Your parents’ advice may not be relevant to current financial burdens like severe inflation