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The Finfluencers Have Arrived

Social media has served as a place to connect with friends and family, share drool-worthy recipes and talk politics, but increasingly it's become a haven for more serious subject matter — including personal finance.

Enter the finfluencer — aka finance influencer. Defined as a “new breed of influencer who’s focused on all things money,” finfluencers represent a rapidly-growing segment of thought leaders who connect with followers via digital outlets to share tips, advice and insights about everything from money management to budgeting to taxes to investing. Although influencers can be found on YouTube, Instagram and other forms of social media, the most popular ones leverage TikTok. In fact, this popularity has introduced the term “Fintok” into the industry lexicon.  

Go ahead and roll your eyes, but do so at the risk of irrelevancy, because influencers are gaining traction and are here to stay.  

Last fall, for instance, the hashtag #FinTok, garnered over 500 million collective views, while the related hashtag #financialfreedom appeared in more than 10 million posts on Instagram.

The Rise of FinTok

Not only can #FinTok deliver financial insights in, say, 60-second videos, but it’s also captivated a cross-generational audience. Both Gen Z (born 1996 - 2012) and millennials (born 1980 - 1994) especially are engaging in finfluencer content.

"Users as young as 17 are now looking to finfluencers to help them navigate the tricky and intimidating pathways of credit management, mortgages and and related topics all through the convenience of their phones."

Seventy-one percent of Millennials and Gen Z say they appreciate financial information coming from someone they can identify with, compared to only 48 percent of the Boomers who say they appreciate financial advice from “someone like them". As a result, the finfluencers are thriving — and like most things digital, their followers increased due to the pandemic.

One analytics firm determined that hours spent on finance apps in 2020 jumped to 90 percent compared to the previous year. Additionally, Guardian Money found that — as of last July — 46 percent of 18- to 34-year-olds had become more interested in investing thanks in a large part to the financial advice they were exposed to on TikTok.

And users as young as 17 are now looking to finfluencers to help them navigate the tricky and intimidating pathways of credit management, mortgages and and related topics all through the convenience of their phones.

Why has the seemingly dry topic of money management suddenly become sexy for so many TikTok users? The answer can likely be found in TikTok’s algorithms naturally recommending videos to those users who express an interest in financial topics. However, even users who aren't seeking out money-related videos may find FinTok videos in their feed because TikTok’s algorithms are designed to present a diverse mix of content to their users.

One example is Ava Montgomery, 17, who came across personal finance when her favorite creators shifted into the FinTok space. “A lot of their videos are advice-based, and a lot of that tends to be around finance. I have taken into account how much I’m going to need to think about that stuff when I’m older,” she says.

FinTok Increases Financial Literacy

More than one-third of millennials and Gen Z Americans say a lack of financial guidance inhibits them from preparing for retirement compared to 30 percent of Gen Z feeling ill-prepared.

“56 percent of Gen Z and millennials say they now “intentionally seek out information or advice about personal finance online or through social media platforms.”

One survey found 53 percent of Gen Z respondents believe they can improve their financial literacy but don’t know how.  For those just starting to manage their finances or simply looking to gain more financial freedom, one of the biggest challenges is finding a voice to trust.

"When it comes to finances, sometimes things are more well-received when they're coming from your friends and peers than from your parents," says Charli D'Amelio, a 17-year-old finfluencer with more than 137.2 million TikTok followers (D’Amelio is also a partner, customer and investor in the teen banking app, Step.)

Another study found 56 percent of Gen Z and millennials say they now “intentionally seek out information or advice about personal finance online or through social media platforms.” And the National Association of Personal Financial Advisors (NAPFA) found 39 percent of Americans under the age of 65 receive their financial advice via social media and online while more than 60 percent of respondents said they acted on that advice.

"It's great to see people enthusiastic about seeking out financial information and helping others financially succeed. The NAPFA survey shows that 54 percent of Generation Z respondents aren't preparing financially for retirement, so if social media can pique their interest, that's a good thing," said Geoffrey Brown, CEO of NAPFA.

FinTok Opportunity of $143+ Billion

Gen Z and the tail end of millennials are just starting to amass their wealth, but, by establishing a relationship with them now, especially Gen Z, is one way financial institutions (FIs) can cultivate  long-term relationships in the coming decades.

"Helping improve financial literacy is one simple step FIs can take to create loyal, longtime customers. However, FIs solely relying on traditional channels to do so may be missing out on a significant revenue opportunity. "

And many fintechs and agile banks are taking full advantage of this trend by partnering with finfluencers to make checking accounts and loans a bit more glamorous. Wealthfront, a robo-adviser, is working with about 15 influencers, says company executive Kate Wauk. “Quite frankly,” she says, “they’re just better at telling our story than we are.”  

Helping improve financial literacy is one simple step FIs can take to create loyal, longtime customers. However, FIs solely relying on traditional channels to do so may be missing out on a significant revenue opportunity.

Gen Z alone is responsible for an estimated $143 billion of annual spending power in the U.S. Though the pandemic has made it tough to predict future earnings, a study by Oxford Economics reported that Gen Z’s estimated future earnings will reach $2 trillion by the year 2030.

In order to capitalize on this opportunity and build lasting relationships with younger customers, mainstream FIs may want to rethink their outreach efforts: 30 - 60 second videos on TikTok might be the most effective way to connect with the next generation of savers and investors.

Financial Equality for Women

A lack of financial literacy may also account for the fact that women earn significantly lower  earnings and, as a result, endure lower credit scores.

BillGO’s latest whitepaper, The State of Play for Women and Paying Bills, explores the role U.S. women play in the economy, the job market and the household.

Download your complimentary copy of the whitepaper now.

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