India has undergone a significant population transition in recent years. As a result, a certain number of people belonging to Gen-Z (born between 1997 and 2012) has increased in the last decade.
The ratio of young investors has increased since the pandemic began. As a result, the National Stock Exchange has gained 17 million new investors (NSE). Since April 2021, the NSE has seen five million new investors, accounting for 62.5 percent of all additions this year. This shift has propelled the country’s financial markets and the general economy.
Young investors seek a quick return and are willing to take risks; they do not stay in stock and instead churn their portfolios frequently to maximize returns. The decreasing interest rates on legacy savings instruments like fixed deposits and postal life insurance are also pushing savvy investors into the market to store their life savings in a diversified portfolio.
Central Depositories Services India Ltd, one of the country’s main securities depositories, reported a nearly 20% increase in the activation of new Demat accounts in the six months following India’s first lockdown, with more than 25 million by September 2020. According to the Securities and Exchange Board of India, most of these were opened by millennials and Gen-Zers aged 24 to 3
Impact of Social Media on Gen-Z
A new breed of money-obsessed influencers was born out of social media, also labeled as “finfluencers” because they provide personal finance tips and hacks on platforms such as YouTube, TikTok, and Instagram. While some of these individual or financial influencers cater to adults, others help children learn about money one bite-sized chunk at a time.
Personal finance influencers use their social media following to educate others about money via interactive learning and a touch of humor in the content. While some finfluencers are finance professionals, others may be regular folks who learned about money the hard way via trial and error and then share their expertise with others. Some also collaborate with fintech brands like Akudo, a neo bank for teenagers, born with the concept of empowering teenagers and millennials on better money management and financial freedom through a gamified savings spree.
TikTok, YouTube, Twitter, and Instagram assist children in becoming financially knowledgeable at a young age, which can prepare them for financial success as adults. Parents and children interested in money may discover that watching finfluencer content together is an excellent approach to starting a conversation about money. The conversation encourages the child to appreciate the value of objects and gives them a head start in managing the assets he has on hand.
This is also relevant because data shows that Gen-Z expects their money to perform more than any previous generation. An elementary shift in understanding how money works have pushed younger generations to invest and increase their money rather than think of it as a nest egg for a nice retirement.
Phony Finfluencers taking over your Phone
As fast as this market is growing, new finfluencers might just be starting off in your own family. Unfortunately, however, in the crop of gurus giving legitimate financial advice, there are others who get into it with the malicious intent of defrauding the gullible.
So just keep in mind that before you like or follow a personal financial influencer, you should conduct some background investigation to ensure they’re legitimate. It is just like banking for teenagers; know before going all-in on your choice.
I know, it’s a weird Catch-22. But it’s always preferred to do your research, as it goes a long way in saving both your money and mental peace.
Look for promises that seem too good to be true to determine if the finfluencer you’re following is authentic. Like hard-selling of a particular financial product, big claims of economic success followed by no proof of the same in particular, and multiple pieces of content that have hardly any views or comments, posted in quick succession.
These are signs that the finfluencer you follow might just be in it to grab your money.
Content is King, and so are sponsors.
With the ever-decreasing attention span of the younger generation, short-form engaging content that delivers entertainment and knowledge wrapped in a convincing delivery and successful image is what the crowd demands nowadays.
Unfortunately, in this short form of content, many nuances of a particular piece of financial advice remain stifled. The result is a risk of sharing a half-baked understanding of the underlying financial principles that are being explained by the influencer. Therefore, finfluencers must balance accuracy with entertainment and provide content that barely checks all the boxes to avoid being considered factually incorrect.
The parallel Boom has significantly propped up the Boom in the personal finance content creators in trading, investment, and financial instrument apps. Many people who founded such companies have become billionaires in the past few years. These companies tend to bankroll popular finance content creators as an inorganic marketing strategy and gain trust in the public through the reputation of the content creator’s goodwill.
This poses a particular risk to people who are gullible enough to follow a personality and act upon their advice without much forethought. Money changes personal opinion like nothing else.
A reputed finfluencer might be willing to sing praises of a financial or digital service they would never use if they are paid to say so. And as many of these respected voices in the content creation space become increasingly dependent on sponsor money to maintain their livelihood, the sponsors and their message overshadow the creator’s content. This poses the most controversial question of all.
Are finfluencers beneficial to me?
As you might have guessed, the answer to this question is more nuanced than a simple yes or no. If you enjoy being informed about financial instruments and opportunities, then influencers are your best friend to keep yourself up to date without reading boring newspapers.
In most cases, legitimate influencers research their information thoroughly to carve out a reputation of accuracy and trustworthiness. But, on the other side, if you have financial issues and find solace in the advice of financial hackers and feel-good advice, it may be time for you to consider a professional financial advisory service and wean off the personal-finance content just a bit.
