Between girl math, loud budgeting and cash stuffing, the trendiest financial advice is increasingly born on TikTok.
That has helped financial TikTok, also known as FinTok, take off.
Now it's one of the most popular sources for financial information, tips and advice, particularly among Generation Z. The hashtag #FinTok, representing just the financial TikTok community, has more than 4.7 billion views on the platform.
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In fact, Gen Zers are nearly five times more likely to say they get financial advice — including stock tips — from social media than adults in their 40s or older, according to a CreditCards.com report.
Young investors, especially those ages 18 to 25, look to so-called "finfluencers" for money-saving, or money-making, wisdom, other research also shows.
With less access to professional advisors and a preference for obtaining information online, Gen Zers are more likely than any other generation to engage with finfluencer content on TikTok, YouTube and Instagram, according to a recent report by the CFA Institute.
Finfluencers appeal to Gen Z investors because they produce educational and engaging content that is instantly accessible and, even better, free, the report found.
"Finfluencers now play an increasingly significant role in educating young people about finance," said Rhodri Preece, a certified financial advisor and senior head of research at the CFA Institute.
"However, our research shows that finfluencer content often lacks sufficient disclosures, which can hinder the ability of consumers to evaluate the objectivity of the information, and some investors may be unaware when and how finfluencers are being paid to promote financial products," he added.
The downside of FinTok
In fact, only 20% of the finfluencer content that contained investment recommendations included any form of disclosure, the CFA Institute found. Regulators typically require financial services professionals to disclose any conflicts of interest or financial incentives with their recommendations, including whether they are being compensated as a result.
Like all things on social media, not all of the "expert" advice you see is necessarily true, or unbiased.
While there are ways to vet traditional financial advisors, it's much harder to find out the intentions or possible conflicts of interest of someone giving advice online.
Until there is more oversight, the CFA Institute advises consumers to look into a finfluencer's qualifications as well as potential financial motivations, and cross-check any information offered online.
To verify a certified financial planner's background, go to the CFP Board's website. Brokers and brokerage firms can be looked up on the Financial Industry Regulatory Authority website and investment advisors can be checked out on the U.S. Securities and Exchange Commission's website.
For other professional designations, go to the FINRA page that lists them, which includes links to the designation organizations.
The upside of FinTok
Aside from investment or tax advice, FinTok can be incredibly helpful when it comes to tackling challenging financial topics from paying down debt to compound interest and saving for long-term goals, other experts say.
"The average American didn't learn the basic tools in school or from their parents," noted Michael Hershfield, founder and CEO of Accrue Savings. "That information is power," he said.
For example, TikTok's latest "loud budgeting" trend aims to encourage consumers to consciously stop overspending and recognize their economic limitations. That type of financial education is key at a time when most Americans say they are living paycheck to paycheck.
"Social media is a cancer but there's good that can come from it," Hershfield added.
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