Nearly 80% of young adults turn to social media for financial advice, but a recent Social Capital Markets report suggests that they may want to reconsider. The report reveals that 71% of the financial guidance targeting Gen Z and Millennials is misleading, with only 13% of influencers possessing relevant finance qualifications. This concern has already led to legal action; for example, several U.K.-based influencers were recently charged with promoting risky financial schemes to millions of followers.

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The study reviewed 2,470 videos from TikTok, YouTube, and Instagram, focusing on popular finance-related hashtags like #StockTok, #Investing, and #Stocktips. Key warning signs were noted in videos lacking disclaimers, pushing specific investments, or implying guaranteed returns. Alarmingly, 83% of the analyzed videos did not include disclaimers, and 57% suggested that returns were assured.

TikTok topped the list as the riskiest platform, with 91% of its finance-related videos missing disclaimers and 70% actively promoting stock purchases. Notably, 65% of TikTok videos implied guaranteed returns, with 50% advising followers on specific income allocations to investments.

Instagram followed closely, where 88% of financial posts had no disclaimers and 65% promoted specific stocks. YouTube came in third, with 76% of posts lacking disclaimers and 75% urging specific investments.

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Why is TikTok particularly risky for financial advice? Besides the high rate of posts lacking disclaimers, TikTok’s short, engaging format often simplifies finance in ways that imply guaranteed returns. Half of TikTok videos analyzed even suggested investing a specific portion of one’s income, which could be risky without personalised financial planning.

Key Insights from the Study

  • 83% of videos lack disclaimers: Most videos analyzed did not adequately warn about the risks associated with investing, leaving viewers with a one-sided picture of financial decisions.
  • 70% encouraged stock-specific investments: Many videos actively promoted specific stock picks without offering adequate context or addressing risks.
  • 57% implied guaranteed returns: Many videos implied that following their investment advice would guarantee wealth or returns, a highly misleading notion given the volatile nature of stock markets.
  • 45% encouraged viewers to invest a specific proportion of income: A concerning number of videos suggested how much of their income viewers should invest, a highly personal decision that should be made based on individual financial situations.
  • 13% only have relevant qualifications or credentials to speak about anything in financial matters.

This report highlights the urgent need for young adults to approach social media finance advice with caution. Seeking guidance from certified financial professionals could help them make more informed, balanced decisions.