New research from Barclays highlights a critical gap in the due diligence process of UK investors using social media for financial guidance.
The study found that over half (51%) of Brits who consult social media for investment advice fail to regularly verify the credibility of finfluencers and their content. This oversight places their investments at significant risk.
The study, which surveyed over 2,000 UK adults, sheds light on the growing reliance on social media as a source of financial guidance, driven by its accessibility and the cost barriers associated with professional financial advice.
A striking 23% of respondents now turn to platforms like social media, community messaging apps, and online forums for investment tips. Among the younger demographic, this number rises considerably, with 37% of young people using these channels for investment support, showcasing a stark generational divide in how different age groups approach financial advice.
The appeal of social media lies in its promise of free access to financial expertise, with 19% of users attracted by the ease and speed of obtaining financial guidance through these platforms. However, the ease of access also brings inherent risks, particularly with less than half (49%) of the users consistently checking the authenticity of the information, potentially exposing them to scams and misleading advice.
Clare Francis, Director of Savings and Investments at Barclays Smart Investor, expressed concerns about the findings: “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.”
Furthermore, the prevalence of investment scams on social media, which account for over half (52%) of such frauds, underscores the urgent need for enhanced safety measures on these platforms. There is a strong demand among users for a verification system that can distinguish credible finfluencers, with 73% of investors supporting this initiative.
Amidst these concerns, Barclays advocates for regulatory reforms to better protect investors. Sasha Wiggins, CEO at Barclays Private Bank and Wealth Management, stressed the need for systemic changes: “The UK landscape needs to change to support and encourage savers to invest for their future. As more people turn to social media for investment guidance, there is clear demand for platforms to improve transparency around finfluencers’ credentials. This is needed to tackle the threat of investment scams and stop people acting on unsuitable guidance.”
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