Social media can be a terrific tool, whether you use it for staying in touch with friends and family, connecting directly with fans or other rugby players, or learning new skills and information.

However, one area that you may want to avoid on social media is financial advice. While it may seem to be an effective way to find investment tips or ideas on how to manage your wealth, financial content on social media has many flaws attached to it.

As reported by MoneyAge, the Financial Conduct Authority (FCA), the financial regulatory body in the UK, actually removed more than 8,500 financial promotions in 2022, describing social media as a “major focus” for where misleading ads need tackling.

So, read about why the FCA are having to take this seriously, and why it is so important to be careful when viewing financial advice content online.

The information you view may not be accurate

Firstly, and perhaps most importantly of all, the biggest danger of viewing content online is that the information may not be accurate.

When making decisions with your wealth, you need to be able to do so safe in the knowledge that any suggestions you read or hear are accurate. To ensure that this happens, the FCA has rules that regulated individuals and firms must follow when promoting financial information, and will also work to remove advertisements that fall foul of these.

However, the social media landscape is vast, and it is realistically not possible for every post to be checked. As a result, it is possible for financial misinformation to thrive on the platforms. 

This became such an issue in 2021 for TikTok that the platform actually banned all investment promotions. FTAdviser reported at the time that this global ban encapsulated everything from investment services to foreign exchange and pyramid schemes, citing concerns from many that the information could be “misleading”. 

While there may be factually correct information on social media platforms, the most sensible course of action is realistically to avoid this content and instead seek it from genuine professionals. 

Online financial content is not personalised advice

Among the financial content on social media, the law of averages suggests that some of it will be correct. But even if it is, that does not necessarily mean that whatever an account or influencer is suggesting is appropriate in your personal circumstances.

Your decisions with your wealth are exactly that: yours. So, they should revolve specifically around you, factoring in elements such as your:

  • Current arrangements, including your pensions, investments, and savings
  • Life goals, and what you want to achieve with your wealth
  • Risk tolerance.

“Each individual is different and what applies to one person may not apply to another”, one retirement planning expert explained in Forbes Advisor when talking about online advice. 

Otherwise, by simply following this advice, you may end up making choices that are not tailored to you as an individual. This could negatively affect your wealth, having a long-term impact on your future.

Influencers are unlikely to be authorised and regulated to provide advice

Additionally, online influencers may not even be authorised and regulated to provide any form of financial advice. 

In the UK, individuals and firms must be registered with the FCA to be able to provide regulated advice. This is important, as it ensures that advisers and planners are suitably qualified to help you manage your wealth, and protects you from bad actors who are only interested in enriching themselves.

Furthermore, working with authorised individuals and firms often means having protection from the Financial Services Compensation Scheme (FSCS). This will protect you for up to £85,000 per institution you hold money with if they become unable to pay out to you, such as if they were to fail entirely.

But bizarrely, influencers are not constrained by these rules. As one personal finance analyst explains in Good Housekeeping, “the fact they are unregulated means they do not have to follow the regulator rules about what they can publish, so they can say what they like.”

If you act on advice you view on social media from an individual who is not authorised and regulated by the FCA, you must do so in the knowledge that they might not have the necessary knowledge and expertise behind their suggestions.

You should also be aware that you will have no recourse for claiming back your money if something goes wrong with a scheme or suggestion that is not covered by the FSCS.

Social media “advisers” may have financial incentives to promote certain content

The other major consideration to take into account when viewing financial information on social media is that influencers and accounts may be financially incentivised to promote certain content.

Many influencers may simply be seeking to promote sponsored content from which they receive money when you follow their affiliate links, rather than offering useful, constructive advice.

This is potentially dangerous for you, as individuals using this strategy will not be interested in what is best for you and your wealth, only caring about promoting content that will help them and their pockets. 

You should only work with experienced professionals

Arguably the most important lesson to take away from financial content on social media is that working with experienced, authorised individuals with your best interests at heart is the key to achieving your financial goals.

That is exactly who we are at DBL. We are expert financial planners who work specifically with rugby players to help you organise your wealth so that you can live the kind of lifestyle you want. 

If you would like to work with an experienced and fully authorised financial planner, please do get in touch with us.

Email or call 01625 529 499 to speak to us today.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.