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The worrying rise of the TikTok influencer-adviser

‘Trading gurus and cryptoasset cult followers are becoming more widespread’

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In the last couple of years, Chinese social media app Tiktok has taken the world by storm.

With its quirky effects, editing tools and short, snappy videos, it has become incredibly popular, especially among younger people – helped in part by the boredom of lockdown.

But, as with any other social media, it didn’t take long for it to be flooded with so-called ‘influencers’.

Many focus on diets, fashion, make up and the sort, but there is a group that enjoys providing ‘investment advice’, or something that resembles it.

A Twitter account by the name ‘@TikTokInvestors’ shares dozens of such videos every day featuring people boasting about how much money they make through trading, or how they can afford wealthy lifestyles without having to work, at least in the traditional way.

It comes as no surprise that people feel drawn to this type of content and promises, but the lure Tiktok and its influencer-creators have is as undeniable as it is dangerous.

‘Cult’

Martin Bamford, financial planner and personal finance writer and podcaster, told International Adviser: “The Tiktok thing is fascinating.

“I’ve been lurking on the platform for a few months, trying to understand better how it works and how we might use it as part of our digital strategy.”

But the surge in people offering ‘advice’ on the platform is concerning for the financial planning sector.

“The appearance of the trading gurus and crypto asset cult followers is becoming more widespread of late,” Bamford said.

“Their content is incredibly dangerous to naive investors. It’s very hard to distinguish between genuine, well-meaning shared experiences, and those who are effectively funnelling viewers into scams.”

International intervention

Although their content can cause serious financial harm, it’s that much more difficult for financial watchdogs to clamp down on this type of information sharing.

“Regulating the content on a social media platform, which crosses international boundaries, will be incredibly hard to do effectively,” Bamford added.

“I think the US and UK regulators need to act swiftly to cut off affiliate income for creators, who are referring their audience back to trading platforms, including Robinhood.

“The Financial Conduct Authority (FCA) is already doing some good work around investing scams and needs to dramatically up its capacity in this respect, to monitor and tackle those Tiktok creators and others who are flogging trading signals, managed investment services, or other scam-like products.”

Marketing strategy

While an international, cross-border approach to tackling misinformation on Tiktok may take a while, there might be something financial advisers can do.

“It would be fantastic to see more financial planners join Tiktok, combatting the scammers and misinformation by producing their own educational content there,” Bamford said.

“The typical client of a financial planner is not using Tiktok, sadly, but using it as part of a digital marketing strategy to grow a personal brand and develop an audience would be a worthwhile investment in the future.”

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