Broadcast Retirement Network’s Jeffrey Snyder discusses the ways that younger generations consumer financial advice with University of Virginia’s Maximillian Brichta.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Maximilian Brichta from the University of Virginia. Max, so great to see you. Thanks for joining us on the program this morning.
This is amazing research, and I want to kind of drill down into this because I think there’s a lot to unpack here, especially for those of us maybe a little older and for those who work in the financial services industry. But at a very high level, it seems like younger generations aren’t going to their mom and dad for financial advice.
They’re going to finfluencers and social media.
Maximillian Brichta, University of Virginia
Yeah, so it’s not that they aren’t going to their parents for advice, but it’s that there’s more than 40% of people who are between the ages of 18 and 29 are going to social media and following or viewing finfluencers. It’s just sort of easy now to open up your For You page on TikTok, and all of a sudden you’re getting financial advice. So it is the context that people are embedded within where this financial advice is starting to surface, it’s starting to become more entertaining, it’s starting to become a lot more accessible, and it’s starting to become a lot more relatable to people.
Jeffrey Snyder, Broadcast Retirement Network
And that’s a good thing because the big thing, and I know you probably timed the research around Financial Literacy Month, which is the month of April. It’s a good thing that more people are involved, I would think, that the more people are involved in learning about credit cards and life insurance and saving for retirement. That’s a good thing.
Right, Max?
Maximillian Brichta, University of Virginia
I think so. What you’ve got to understand is there’s a deficit of financial education. There’s an effort to push legislation so that there are more required courses, not just a couple of weeks in the middle of an econ course in high school, but a full semester worth of personal finance at high schools right now.
And that’s just starting to take off. I think it’s about 27 states have some legislation passed and they are already integrating it or over the next five years will be integrating it. But there really is a lack of financial education in the U.S. And so I think this is one way, so long as you’re following the right people and you’re not getting pulled astray into get-rich-quick schemes and other sketchy stuff, that this really could fill some of the gaps in the education in the U.S. If we could, can we talk about that?
Jeffrey Snyder, Broadcast Retirement Network
Is there a way currently on TikTok and Instagram and Facebook and all the other platforms, is there a way to discern? How do you discern between what’s good advice or bad advice? I would imagine that if it says buy cryptocurrency and go to an online casino, that would probably set off some bells and whistles.
But how do you discern between what’s good and what is bad advice? Or can you?
Maximillian Brichta, University of Virginia
I think there’s a couple of ways that you could, a few things to look out for. First thing is to look to see if it is paid content, if this is a sponsorship. I’m suspicious of even, you know, some of these are, let’s say, good uses of a credit card and they might be tailored to your specific financial situation.
But these are people getting paid thousands, sometimes tens of thousands of dollars per month to promote this specific product. And I would be a little bit wary about that, especially because it really might not be tailored to your specific financial situation. When this is a person who is making, you know, six plus figures a year now, and a lot of it coming from their content creation, they’re…
I think when you see any promises, that raises a red flag for me, too. Anything that jumps out at you as trying to get you to purchase a course or, you know, pay for a masterclass or something from some of these influencers, not to say that these courses are going to be bad or that they’re going to lead you in the wrong direction, but you have to be careful about the monetization schemes and think about how are these monetization schemes putting pressures on them to create the specific type of material to say these particular things to me and to make me reliant or dependent on them? I think once it gets into the realm of dependence, then we’re looking for trouble.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I apologize for interrupting you. That was not my intent. I’m glad you’re able to finish your thought.
Are there some lessons here? You know, I come from the financial services and retirement, pardon me, industries. Are there…
You know, social media is not going away. I mean, it’s not… We’re not going to turn…
Unless the world ends and there’s an EMP pulse, right, you know, social media is going to be here. So are there lessons for financial advisors, financial services organizations, technology organizations about this? I mean, what can they take away from your report, but what can they take away from some of these finfluencers?
Maximillian Brichta, University of Virginia
I think the first big takeaway is that we have to recognize that this is going on. You know, there are finfluencers with millions of followers and, you know, getting tons of engagement every day. And I think the impulse right now from a lot of the conversations that I’m having with folks in traditional financial posts and who are interested in personal finance education feel like it is just noise and that it is all something to either tune out or to tell people to not pay attention to.
And I think that’s a little bit shallow in terms of what is actually out there. These are, you know, people are getting fed this material. And so the question is what to do with that.
Jeffrey Snyder, Broadcast Retirement Network
And also to that, I mean, ours is a highly regulated industry. Are there lessons here for local, federal, state governments that oversee some of these platforms, but some of the financial instruments that are being promoted? And likewise, are there lessons here for the technology, social media platforms about what is being promoted?
I feel like it’s kind of a Wild West in some ways.
Maximillian Brichta, University of Virginia
Yeah, I mean, I think the one line that kind of absolves people of their responsibility is this is not financial advice. Don’t don’t take any of this as financial advice. And then the next two minutes is just pure financial advice.
And so it’s up to the platforms, frankly, to figure out how to moderate this stuff, how to figure out what is financial advice, how to figure out what is like things that typical chartered financial advisors have to go through school and do thousands of hours of practice to actually have the credential to give this advice to very specific people in very specific situations. And it’s just not set up for that at the moment. So it really does come down to how do you limit this speech in a way?
And so it gets a little tricky there.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I think it’s a it’s part of the broader conversation. I mean, I think you have to, you know, I want to get your feedback on this, but you have to be able to have the rationalization as an individual to know what seems sketchy and versus right. I mean, and you brought up that, hey, this is not financial advice.
I would argue that in the retirement industry and the financial services industry, we always say past performance is not indicative of future results. Right. So we kind of, you know, while we’re pitching products and services.
So I think it kind of probably cuts both ways. But this is this is kind of the new frontier. Right, Max?
I mean, this is not you can’t put your head in the sand. It’s not going away.
Maximillian Brichta, University of Virginia
No, it’s not going away. You know, I think what you’re really putting your finger on is that this social media and financial advice are they’re bound up and you cannot separate them. And this is kind of a media literacy question that was like, what advice is going to be accurate and what advice is going to be valuable for you?
And it’s not so simple to be able to wade through it and, you know, tell from one influencer to the next who’s got your best interest in mind. One of the fascinating things now is that. The personal finance education is getting more personal, there’s an emphasis on the personal element of people that are guiding you through their lives, and, you know, they are in their early 20s some of the time and they are just figuring it out on their own and they’re documenting this process, and some of them are more or less transparent about the mistakes that they make and the emotions that they’re feeling and the, you know, the troubles that they get into and, you know, unfolding their financial path. And so you’re kind of watching it like a reality TV show of how these different people in different situations are managing their personal financial lives.
So it does get bound up with entertainment. But I think there is something in there that is refreshing and that is breaking down some of the taboos about talking about money. It’s really bringing it into the realm of the mundane.
And there are people out there who are, frankly, really relatable and they’re going to have similar identity features of you and similar socioeconomic statuses as you. And so there’s a lot out there that could actually be really great to tune into. But at the same time, you know, these are monetization trajectories and each one of them is looking to, for the most part, end up making some money off of this and perhaps even make this their primary source of income.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I mean, I think authenticity is certainly important as long as they don’t, you know, are not throwing plates like they do on reality TV or, you know, we don’t have the version of the Jersey Shore. They could call it whatever they want to call it. Call it the financial shore.
I don’t know, Max. We’re going to have to leave it there. Great to see a great research.
And look, we look forward to having you back on the program again very soon.
Maximillian Brichta, University of Virginia
Thanks for having me.