More than half of Britons using social media for investment guidance are putting their money at risk, Barclays warns.
New research commissioned by the bank shows 51 percent of people fail to verify the reliability of financial influencers, or “finfluencers,” and their content.
The findings showed that a quarter (23 percent) are turning to social media, community messaging apps and online forums for investment advice. One in five do so because it provides them with “free access to financial experts”. A quarter think that it is “quick and easy to use”, while 19 percent said the format of the content is “easy to digest”.
Less than half (49 percent) check the information they receive on these channels is from a reliable source – such as an accredited professional or experienced investor.
Clare Francis, director of savings and investments at Barclays Smart Investor, said: “Our research shows that a quarter of people don’t know how or where to start investing, with growing numbers turning to social media for this support.
“These platforms clearly play a positive role in making investment information more relatable, but they also come with risks. It can be difficult to work out which accounts are trustworthy and run by experienced financial professionals, so it’s worrying to see that half don’t carry out regular checks on finfluencers.
“This puts them at risk of making unsuitable investment decisions or even falling victim to investment scams.”
When asked what would improve confidence in the investment content shared by social media influencers, a better understanding of risks came out on top.
Ms Francis shared three “top tips” on what to look out for when browsing investment guidance on social media.
Do your own research before parting with any money
People should always check any investment information shared on social media to make sure that the source can be trusted.
Sharing an example of how to do this, Ms Francis said: “Click on their bio to see if the finfluencer has a background in finance or experience in the investment field. If you struggle to reassure yourself that they know what they are talking about, be cautious about acting on their guidance.”
Make sure it’s right for your circumstances and goals
Investment information on social media isn’t tailored to people’s personal circumstances, even if they typically resonate with the influencer in question.
Ms Francis said: “Have a look at whether the investments they’re talking about are sold on any regulated investment platforms. Steer clear if they’re not and even if they are, do some additional research to make sure you’re comfortable that it’s appropriate for your needs.”
Stay scam smart
Scammers often target investors on social media, making it most important to ensure any investment opportunity is genuine.
Ms Francis said: “Look for online reviews and use the FCA’s ScamSmart Investment Checker to make sure the firm promoting the investment isn’t on their warning list. You can also check the Financial Services Register to make sure that they are authorised by the FCA and find registered details you can use to contact them in a legitimate way.”
