Since Christmas, it's been fascinating to see the rise of another bubble, the trading tipper on social network TikTok. These so-called ‘finfluencers’ share short videos with their tips on foreign exchange, cryptocurrency and plain old boring company shares.
Some of those sharing stock tips on TikTok are fairly innocent; they probably think that they're doing their followers a favour. Others who share their content on this platform are more malicious.
At one end of this malicious scale, they include an affiliate link to their favourite trading platform. Or more accurately the trading platform that offers them the biggest payment for each new member they introduce.
And at the worst end of the malicious scale, they flog scams including ‘trading signals’, where you pay a monthly fee to be part of their WhatsApp group chat. Within this group, they pop up a couple of times a day with suggestions for trading moves. This is no better than gambling tips.
It's very hard indeed for the regulator to effectively deal with this space. For the FCA it must be like playing whack-a-mole. While the regulator has taken action against a handful of social media 'finfluencers', in the space of three or four minutes of browsing through TikTok, I found numerous examples of these individuals, many of them using affiliate links or trading signals.
The platforms themselves claim to identify and address users who place others at risk of financial harm, including those scamming their followers.
But I don't think we can rely on the FCA or the social media platforms to take decisive action when it comes to protecting consumers from this latest get rich quick scam. Instead, what's needed is a much better level of financial education.
We're not going to get financial education from schools, despite the excellent work they do around online safety. I'm always very proud when my kids point out that some of my social media activity doesn't meet their strict safety standards!
So what's the solution or at least part antidote to this toxic content?
I believe in the absence of the FCA’s own TikTok channel, Financial Planners need to get on there and create content. It's very unlikely that the typical user of TikTok will be the type of client with which you wish to engage, so this is more about social responsibility than it is about marketing.
But if we allow these so-called influencers to continue to get away with what they are doing on social media platforms, we all risk significant reputational damage. That's because the typical new investor will struggle to differentiate between the stock tips that they see on TikTok, and the advice they may well get in the future from a professional Financial Planner.
Education is key to this conundrum. While the last thing I want to see is a Financial Planner doing a meme dance on the platform, I would dearly love to see all of you sharing scam prevention tips, making pensions sexy and extolling the virtues of getting rich slowly.