Retail investors are taking a greater share of the stock market overall. A good portion of them obtain financial guidance through social media platforms like Instagram, LinkedIn, TikTok and YouTube.
A recent study conducted by the FINRA Foundation and the CFA Institute found that about half (48%) of Generation Z investors learn about investing and finances primarily through social media. And Coherent Market Insights predicts the “global creator economy market” size will jump 22.5% on an annualized growth rate to $528.4 billion from 2023 to 2030.
Recognizing this growth, regulatory authorities including the SEC and FINRA have ramped up their industry warnings as well as enforcement actions this year against firms that they said misled investors through posts on social media.
Regardless of the platform, “Fraud is fraud. Don’t mislead the public,” said SEC Chair Gary Gensler during an SEC Investor Advisory Committee meeting on June 6. “Further, if you take money to promote a security, you must disclose that you have received consideration for the promotion, as well as the amount of such consideration.”
READ MORE: SEC raises concerns about influencers like Roaring Kitty, conflicts with AI
Still, a majority of retail investors on social media tend to be members of the younger generations set to gain as part the great wealth transfer — in other words, the people whom most advisors want to capture to grow their business.
“You’ve got to find people where they’re at. You don’t have to be on TikTok doing your TikTok dance and having a conversation about term life insurance versus cash value,” said Jordan Hutchison, vice president of technology and operations at RFG Advisory. “But you do need to have some kind of web presence in some capacity. And I think having it out there adds a lot of value.”
Advisors, regulators and communication experts offered critical tips for engaging on social media. Their pointers are below:
READ MORE: Know before you post: How advisors can use social media without raising regulatory ire
