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Financial influencers: The dangerous bank advisors from the internet

Young people in particular are becoming increasingly interested in finance. Many users trust the tips of financial influencers on Instagram and Co. But it is precisely these digital opinion leaders that harbor a real danger, although the influence is not even intended. A classification.

With almost 30 million monthly active users, Instagram is not only one of the largest social platforms in Germany. No, with a penetration of more than 30 percent of the German population, Instagram has actually become a central news and information medium.

While we used to read magazines or watch TV shows to catch up on world news, nutrition tips or decorating inspiration, we now scroll through our social media feeds.

Podcasts, social media and financial influencers: Important source of information

Of course, this not only applies to the design of our home or our food, but also to our finances. That also reveals one representative study by the market research institute YouGov from June 2022.

The pollsters asked a total of 2,040 participants about the role of social media in the search for information on money issues. The results are fundamentally very divided.

While in the overall view across all age groups only 18 percent say they use social media for financial research, and eight percent listen to podcasts, the distribution among young people looks different.

More than two thirds of young Germans rely on financial influencers and social media posts

In the relevant target group of 18 to 34 year olds at least follow 68 percent at least one financial influencer on Instagram, Facebook and Co. In addition, at least listen 23 percent finance podcasts.

This shows more than clearly: Young people in particular are more concerned with investing on the one hand and rely more on social media on the other hand than older people. That harbors opportunities and dangers.

opportunity or risk? Financial influencers and their dual role

As is so often the case, there are two different perspectives when it comes to financial influencers. Both perspectives are justified and should therefore also be considered when considering the topic personally.

Pro: What speaks for financial influencers on Instagram and Co.?

First of all, financial influencers on Instagram and Co. play a very important role. After all, they bring one of the central themes of our world and our lives to the fore: financial provision.

In Germany in particular, stocks and ETFs have a bad reputation. And even in school education, there is hardly any investment. Both developments are extremely problematic because the statutory pension, especially for young people, is no longer sufficient to provide for old age.

Instead, it is essential to secure your personal future with alternative investment options as early as possible. Financial influencers draw attention to precisely this problem and the available options through their work on social media. That deserves praise.

Cons: What speaks against financial influencers on Instagram and Co.?

At the same time, it is crucial to keep in mind that the (mostly) financial influencers on Instagram and Co. are by no means altruistic. As the number of followers increases, most accounts start generating additional income through affiliate marketing.

What does that mean? If certain accounts or securities accounts are recommended, this is (not only) because of a good offer. Depending on the financial influencer, recommendations are also made that are particularly lucrative thanks to bonus payments.

And another factor is crucial in the analysis: the subconscious influence. By repeatedly mentioning certain stocks or ETFs on Instagram or Twitter from different accounts, it gives the impression that it is a “good” investment.

However, that is not necessarily the case. Just because one or more accounts recommend a particular form of investing doesn’t take away the task of doing your own research. Form your own opinion and do not blindly trust the advice of others.

Financial influencers: how to deal with them correctly?

The last note in particular is essential for all private investors. Even if it’s difficult, an Instagram post never replaces your own analysis of a company or a form of investment.

Good financial influencers on Instagram and Co. are also characterized by the fact that they not only present shares, but also point out the risks every day. So if you follow an account that never warns about its own recommendations, the proverbial alarm bells should ring.

In the end, it’s your money that’s at stake. No Instagram account you follow will take responsibility for your wins or losses. Ultimately, you are responsible for your own investments.

Therefore, you should always know why you are buying a stock and what strategy you are pursuing. And no: because financial influencer XY recommended a share is not a good argument!

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The contribution Financial Influencer: The dangerous bank advisors from the internet by Christian Erxleben first appeared on BASIC thinking. Follow us too Facebook, Twitter and Instagram.

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