Nearly 80% Of Young Adults Get Financial Advice From This Surprising Place

Where do 80% of young adults get financial advice? –Forbes Advisor

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You can browse Reddit to catch up on the latest news and views. Or you can get sucked into watching lip sync videos on TikTok. But a lot of Americans between the ages of 18 and 41 turn to social media for something much more serious: advice on credit card debt and other financial matters.

A survey commissioned by Forbes Advisor and conducted by market research firm Prolific found that 79% of millennials and Gen Z members have received financial advice from social media.

But should millennials, Gen Zers, or anyone else trust social media to guide decisions about their money? Opinions among personal finance professionals are divided.

Key survey findings

  • 79% of Americans representing the millennial or Gen Z age groups have received financial advice from social media.
  • 76% believe that financial content on social media has made talking about money less taboo.
  • 62% feel empowered by their access to financial advice on social media.
  • Reddit and YouTube are the most trusted platforms for financial advice
  • 50% have made money as a direct result of financial advice received on social media.

Should you trust personal finance advice on social media?

Chartered retirement planning adviser Jake Falcon, founder and CEO of Falcon Wealth Advisors, is skeptical about following financial advice spread on social media platforms.

“There are some gurus out there who can give general advice, but the reality is that every individual is different and what applies to one person may not apply to another,” says Falcon. “A big downside to getting advice on social media is that the person offering the advice may not be qualified to do so.”

On the other hand, certified financial planner Brian Walsh, manager of financial planning at online financial platform SoFi, doesn’t believe in throwing away all the personal financial information you find on social media. For example, if he follows the right people on Twitter, he can find “valuable and diverse” information on personal finance, he says.

“Social media tends to get a bad rap when it comes to personal finance, but that’s grossly unfair,” Walsh says. “Fortunately, the good examples of good financial advice on social media outweigh the bad. You just have to know where to look and how to distinguish between the two.”

Social media platforms are awash with conversations about money

The vast majority of millennials and Gen Z say they’ve received financial advice from social media. But where do they most often get financial information? Millennials prefer Reddit, while Gen Zers prefer YouTube.

Nearly 7 in 10 respondents (69%) find financial advice on social media at least once a week, and 1 in 4 find it every day.

Social media sources where young adults receive financial information

Most trusted social networking site for financial information

Walsh says there’s really no barrier to offering and absorbing financial information on social media platforms.

“That means people can easily provide and access information. But when it comes to something as important and complex as personal finances, I worry because there is no one-size-fits-all approach,” she says.

As such, social media can promote bad and irresponsible approaches to achieving financial goals, particularly since someone giving financial advice might not be qualified to do so, Walsh says. In the survey, only 31% of millennials and Gen Zs regularly check the experience and qualifications of people who give financial advice on social media.

Outside of social media, respondents primarily get financial advice from family members (35%) and Internet searches (33%). The use of financial advisers is comparatively rare (11%).

Walsh recommends LinkedIn and Twitter as the best social media sources for reliable personal finance information.

“These two platforms allow people to provide context, which is extremely valuable when it comes to personal finance. Other platforms tend to offer much shorter content that often lacks context,” she says. “I emphasize context because there aren’t many absolutes in personal finance.”

Using social media for budget advice, not “get rich quick” schemes

As you browse social media platforms, a flurry of financial topics pops up, including stock and bond advice (the most common topic reported by respondents at 57%), debt reduction recommendations, or retirement savings guidance. . The two least viewed topics among those we surveyed were get-rich-quick schemes (11%) and loans (7%).

Types of Advice Young Adults Get on Social Media

Half of the people surveyed say they have made money as a direct result of financial advice on social media, but 28% say they have lost money.

“Unfortunately, anyone can post anything online without consequence, including bad or inaccurate money management advice,” says certified financial planner and certified private wealth advisor Rick Nott, a senior wealth advisor at LourdMurray. “I am a regulated adviser. There are some things I just can’t say, and for good reason. You don’t get that filtering online.”

Falcon recommends relying on social media only for general financial education and then seeking detailed advice from a certified financial professional.

Certified financial behavior specialist Cara Macksoud, CEO and CEO of personal finance platform Money Habits, notes that younger people may be more inclined to take advice from people in their own generation than from other generations. But that generational advice comes with a dose of caution.

“Gen Zers idolize influencers, many of whom are paid to promote financial advice, such as advice on crypto,” Macksoud says. “What these influencers are leaving out is the risks and the understanding that it takes to manage those types of investments.”

Financial advice on social media is a boon for the historically disenfranchised

While financial professionals advise extreme caution when adopting financial advice from social media, 78% of respondents believe they have more access to financial advice now than they did in previous generations due to their identity, such as race, nationality, gender or income.

In the survey:

  • 72% of black respondents believe their race would have historically been a barrier to obtaining financial advice
  • 65% of women think the same about gender.
  • 57% of people making less than $35,000 say their financial situation would have been a barrier to getting financial advice

Meanwhile, more than three-quarters (76%) of millennials and Gen Zers think financial content on social media has made talking about money less taboo, and 62% feel empowered by their access to it. information on social media platforms, including 75% of black respondents.

Also:

  • 73% report that social media has improved their financial education
  • 66% believe they are more financially literate than previous generations.
  • 66% believe they are more financially literate than their parents at the same age.

Although social media has made financial advice more democratic, certified financial planner Carl Holubowich, a principal at Armstrong Fleming & Moore, cautions that young people should be on the lookout for financial scams fueled by social media.

In a 2022 study, the Federal Trade Commission (FTC) noted that among 2021 fraud reports citing victim age, Americans ages 20-29 accounted for 41% of fraud losses, compared with 18% of people aged 70 to 79.

“Virtually anyone can be a victim of fraudulent crimes,” says the US Department of Justice. “No one is overlooked by scammers based on factors such as age, finances, education level, gender, race a person’s culture, ability, or geographic location. In fact, fraud perpetrators often target certain groups based on these factors.”

In 2021, more than 95,000 people reported about $770 million in losses from fraud initiated on social media platforms, according to the FTC. Those losses accounted for about a quarter of all reported fraud losses in 2021. Those numbers led the FTC to call social media a “gold mine for scammers.”

Bottom line

Social media isn’t going anywhere, of course. But neither is the presence of financial tips and scams on social media platforms.

Still, social media has broken down some barriers in personal finance. Many millennials and Gen Zers say that platforms like Reddit and YouTube have made the subject of money less taboo, increased their feelings of empowerment and, in some cases, generated more money.

That being said, millennials and members of Gen Z should stay on their toes when it comes to financial advice on social media on topics ranging from stocks to cryptocurrency. After all, the survey found that only 1 in 3 people aged 18 to 41 had researched sources of financial advice on social media.

“Be skeptical. Don’t take everything you read at face value,” advises Nott. “Instead, approach the material with an analytical eye and ask yourself if it makes sense or if something doesn’t add up.”

Methodology

This online survey of 1,009 millennial and Gen Z American adults was commissioned by Forbes Advisor and conducted by market research firm Prolific. The margin of error is +/- 3.1 points with 95% confidence. Data was collected from January 4 to 6, 2023.

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