A survey commissioned by the UK regulator has highlighted the overwhelming impact posts by social media finfluencers are having on young investors, with nearly fourth fifths influenced by such platforms.
The survey of 2,000 UK investors aged 18-40 years old was conducted on behalf of the Financial Conduct Authority (FCA) by Censuswide.
It found social media apps such as Instagram, TikTok, and YouTube were highly influential in 85% of respondents’ investment decisions, with 43% using such platforms as their primary research tool.
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The survey also found two-thirds of young investors make investment decisions in under a day. And one-in-seven, or 14%, make such a decision in less than an hour.
Just 11% take more than a week to make a final decision on an investment. By contrast, nearly two-thirds said they would buy into investment products hyped by social media finfluencers online.
On average, young investors spend around £550 on average on hyped investment products, with 40% later regretting spending money on these.
Over half had put in more money than they originally intended in certain investments due to fear of missing out (FOMO). Among those who purchased items that went viral online, including consumer products, 27% had purchased crypto.
Earlier in 2024, official police data obtained by the Good Money Guide found UK consumers lost £75 million to financial scams on social media in just one year.
FCA director of consumer investments Lucy Castledine said: “If you’re considering investing, the very first investment you should make is some of your own time.
“It’s important to look beyond the hype, especially on social media, and do your research to make sure what you are investing in fits with your financial goals.”
As part of its related InvestSmart campaign, which also highlights the challenge posed by social media finfluencers, the FCA has laid out five core questions it thinks investors should consider before putting their money at risk. These are:
- Am I comfortable with the level of risk? Can I afford to lose my money?
- Do I understand the investment and could I get my money out easily?
- Are my investments regulated?
- Am I protected if the investment provider or my adviser goes out of business?
- Should I get financial advice?
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
