Imagine getting personal finance tips from someone who feels like a friend, breaking down complex money matters into fun, relatable bites.
That’s exactly what financial influencers, or 'finfluencers', are doing in today’s digital age.
According to a CFA Institute survey, 38 per cent of UK Gen Z investors rely on social media influencers for their investment decisions.
The hashtag #fintok has more than 900mn views, showing just how popular these digital money mentors are.
Some finfluencers are stepping in to bridge wage and wealth gaps and improve social mobility by making financial content accessible and palatable to a wide audience.
They take complicated financial concepts and make them understandable, especially to those individuals who feel excluded by traditional financial resources.
This inclusivity is key to helping everyone take control of their financial futures, especially when it comes to pensions and savings.
While finfluencers make money fun and approachable, there are risks.
The FCA recently charged nine finfluencers with allegedly running unauthorised investment schemes, highlighting the need for regulatory compliance.
A study by MoneySuperMarket found that nearly three-quarters of videos from finfluencers contained poor, misleading, or even dangerous advice.
Not all finfluencers play by the rules, which can be risky for their followers.
Unique opportunity
Financial services firms have a unique opportunity to learn from finfluencers and make their content more relatable and inclusive.
Embedding diversity, equity, and inclusion in financial services is crucial to meet this aim.
A diverse customer base requires firms to have a nuanced understanding of different financial needs and behaviours to improve financial inclusion, and to provide customers with meaningful and affordable products delivered in an inclusive and sustainable way.
Diversity of thought is essential for navigating the complex and evolving challenges that customers face in the financial sector and broader society.
In the workforce, it requires assembling talent with varied thinking styles.
These can stem from, but are not limited to, different perspectives, abilities, education, attitudes, ways of processing information, and demographic backgrounds.
Recognising how these dimensions of diversity combined with an inclusive work culture influence our problem-solving approaches may very well enhance product development and service delivery.
For example, research by Fair4All Finance revealed that 20 per cent of individuals from minority ethnic groups have faced racial discrimination from financial providers.
Adopting fair practices is crucial to reducing biases and ensuring an inclusive customer experience.
Representation matters too. It can break down psychological barriers that prevent under-represented groups from engaging with financial services.
The FCA’s advice and guidance review aims to make financial advice and guidance more accessible, and part of its effectiveness will hinge on diverse representation.
We naturally gravitate towards people who understand and respect our cultural nuances, our ways of earning and saving, and even our definitions of financial success.
