Understanding the Impact of ‘Finfluencers’ on Financial Literacy and Education

Uncovering the World of Finfluencers: A Deep Dive into the Financial Influencer Community

While luxury cars and ostentatious jewelry often serve as symbols of wealth on social media platforms like TikTok and Instagram, there’s a growing trend of financial influencers, or finfluencers, offering more than just superficial impressions of affluence. From pushing controversial crypto scams to promoting dubious “get rich quick” schemes, the finfluencer community is a mixed bag of both the good and the bad.

The Bright Side of the Finfluencer Space

Despite the questionable actions of some finfluencers, it’s important not to overlook the earnest creators within this space who are genuinely passionate about personal finance, budgeting, and investing. These responsible finfluencers are empowering their audience with knowledge about financial planning, low-cost ETFs, and the benefits of 401(k) matches.

For financial advisors and benefit leaders, recognizing this shift is crucial, as these influencers are shaping the financial literacy and spending behaviors of future generations. In fact, finfluencers like Angelo Castillo, who goes by “Profitplug” on social media, have gained significant followers by sharing their experiences with personal finance and business ventures, such as flipping books on eBay and Amazon.

Finfluencers and Financial Education

Despite his lack of formal training in finance, Castillo’s transparency about his journey has earned him a following of over 1.6 million on TikTok, Instagram, and YouTube. His content ranges from practical investing advice to budgeting tips and side hustle ideas. Most finfluencers share their personal experiences, which helps them connect with their audience on a more personal level. This personal touch, finfluencers argue, is key to their success.

Even though authenticity tends to resonate with audiences, finfluencers admit that it’s often the flashy, “get rich like me” type videos that generate the most engagement. Content that elicits strong emotional responses or envy often has a higher chance of going viral, according to Barry Ritholtz, co-founder of Ritholtz Wealth Management in New York.

Traditional Institutions Entering the Finfluencer Space

As the finfluencer community continues to grow, traditional media outlets like The Wall Street Journal, CNBC, and Bloomberg are also trying to carve out a presence in this online space. By adopting a similar approach to personal finance content creation, these institutions are managing to appeal to the same audience as individual finfluencers.

The Shift from Financial Advisor to Finfluencer

Research by the FINRA Foundation and the CFA Institute shows that Gen Z investors primarily rely on social media for their financial information. However, few financial advisors are capitalizing on this opportunity to reach younger audiences. Those who do take the plunge, however, stand to benefit from building relationships with potential future clients.

The Future of Financial Advising and Finfluencers

While the proliferation of free financial advice online might deter some from seeking professional financial advisors, there’s a significant opportunity for those advisors who are willing to engage with younger audiences on social media. A survey from MagnifyMoney revealed that a majority of Gen Zers prefer a financial advisor over a robo-advisor but are often deterred by misconceptions about the industry.

Finfluencers Encouraging Financial Conversations

Many finfluencers, like Zhang and Castillo, are motivated by their personal experiences and the desire to provide financial guidance and mentorship that they lacked growing up. These creators are not just discussing personal finance; they’re making it more accessible and relatable, opening up conversations about money that were once regarded as taboo.