Like many of you, I suspect I’m addicted to social media. But my habit has changed. I used to get up every morning and before checking my work emails or even text messages, I would browse Facebook pages and pages, sharing short blurbs and photos with my friends and family.
Today it’s memes and short videos, largely produced by strangers. Today, TikTok (and to a lesser extent Instagram) has become the dominant player in the short-form video space, and #FinTok has become an influential subset of the platform.
A recent study by Credit Karma showed that 26% of millennials and 52% of Gen Z get their financial advice from TikTok. It’s frightening.
The biggest challenge with these videos, and the reason our shortened attention spans have grown to love them, is their 60-second time limit. Many videos are only 15 seconds long! Within an hour, you can easily surf through over 100 videos on a range of topics from home improvement and life tips to motivational speeches and, you guessed it, financial advice. These videos are released in quick succession, one after another, and it draws you in.
The problem is that much of the #FinTok or #StockTok advice dispensed on these videos is wrong or misleading, and we’re not enough financial planners making enough noise in these spaces to drown out the bad advice.
Financial advisors have long been afraid to embrace social media for anything other than networking and personal use for fear of breaching compliance regulations. This fear has created a vacuum in the world of social media where financial “experts” and nightlife influencers dominate sites like TikTok and Instagram. These videos are captivating, entertaining and memorable. Damage will certainly ensue.
How bad are the videos? Here are a few that have popped up in my feed over the past two weeks:
Not the whole story
Premise: Your bank is scamming you. If you have $10,000 in the bank, you will earn $1 a year in interest. If you need a loan they will charge you way more than $1. Therefore, if you put money in a bank, you have given them a loan where you get paid back minus 1%. Instead of being a jerk and allowing a bank to pay your negative interest, you should instead put your money in whole life insurance and allow your money to accumulate at a much faster rate.
My opinion : First of all, it’s no secret that banks make money by lending the money you put in your savings and checking accounts. Second, the calculations don’t quite match. Third, while I think whole life insurance is great in some cases, people clearly shouldn’t use insurance instead of an emergency fund.
Not the whole truth
Premise: You are a fool for not using business credit that is not based on your own social security number and credit report. You would take out a $45,000 business loan, then take $35,000 and invest it to get a 15% rate of return. Use the remaining $10,000 to pay loan repayments. Therefore, you use the money from the bank to pay the bank and earn a rate of return.
My opinion : First of all, do you even have a business? Second, business credit is almost always tied to personal credit. Third, no, I’m not taking your Master Class!
someone is going to jail
Premise: How to get a $75,000 business loan without your social security number. First, open an LLC. Next, get a business address and business phone number. Then get an EIN, DUNS number and open a business bank account. Open trade lines from vendors, a gas card, and retail credit cards. Then apply for a business loan. Ta-da!
My opinion : I don’t think I would look good in prison stripes.
In the fray
As you can see from this random assortment of advice, a crisis is brewing. TikTok has not created an adequate compliance program to flag this content, and there is no industry watchdog that monitors this content because most of these promoters are not licensed in the first place.
What is the solution? It’s us. Licensed, seasoned and honest advisors are joining the platforms to mitigate the damage. No idea how to do it, you say? Ignorance is no excuse! Here are some tips on how to engage on TikTok.
Create a page by visiting ICT Tac. Click on “Connection” then on “Register”. Then start scrolling and following. Use the app’s search bar to locate financial content by searching for topics like #FinTok or #MoneyTips.
Once you’re oriented, make some noise in the comments section. Be brave and point out inaccuracies in a misleading video. Do not be discouraged if you are drowned or attacked. But don’t spend too much time in the comments – you might be fighting a bot!
When it comes to compliance issues, take the time to familiarize yourself with your company’s rules and educate yourself SEC Social Media Rules. In summary, avoid false and/or misleading statements, and archive your activity for three years. It is also recommended to avoid suggesting specific actions without the appropriate information.
When you’ve mastered that, it’s time to take the next step.
Make a TikTok video
First, get an idea of what works in the format. I’ve seen many inexperienced newbies — and yes, that often means older ones — still show up at the end of the video, and they’re cut off before they get to their point.
Ask a young person in your life for advice on how to get your message across using TikTok tropes. What songs should you use? What are popular visual formats – like where you point to different corners of screens and words appear. Or the ones in which you talk to cloned versions of yourself, but each one looks a little different.
Include a way for people to contact you and learn more by placing a link to your website in your bio or creating a special landing page on your site for people to find you.
Create lots of content. Back then, you could write a quarterly newsletter to get your message across. If you want to be seen on TikTok, you will need to post multiple videos every few days.
Have a little fun! These platforms are not supposed to be Bloomberg or CNBC. If people are first drawn to your personality and style, they will soon be drawn to your knowledge.
You might think these TikTokkers and Instagrammers have no money. But don’t forget that millennials will inherit $30 trillion to $68 trillion in the coming years. Social media can be an easy way to expand your network and customer base.
And despite what happens, you will be doing the world a great service by adding your rightful voice to a noisy crowd where the people with the loudest megaphones are often the ones giving the worst advice.