Can you trust financial information on social media?

Many of us turn to social media for advice and information on practically everything these days - in particular money.

In fact, new research by Aqua shows that nearly one in five Brits (18%) now use social media to get financial advice.

That’s almost as many as the number who turn to financial advisers (21%) or news websites (24%) for information.

But how do you know if your source is reliable?

After all, the same study found that nearly two in five Brits (38%) have made a financial decision based on something that they later found out wasn’t true.

And many are also falling for common myths, such as the notion that budgeting means giving up the things you enjoy (13%).

“With so many people turning to social media, friends, or family for advice, it’s more important than ever to sense-check information and seek guidance from reliable sources,” said Sharvan Selvam, commercial director at Aqua.

Why you can’t rely on social media for financial advice

Many influencers have built their social media following on offering financial advice.

But in many cases, they won’t be regulated specialists in this area.

So they’re under no obligation to:

• act in your best interests
• fact-check any claims they make
• verify whether the products they’re promoting are genuine and legitimate

This means that if you follow an influencer’s advice and lose a lot of money, there’s nothing you can do.

Social media stars are also trying to engage with a mass audience, not you personally.

So they can’t know your specific situation, your goals and your priorities, which means they can’t always give appropriate advice.

How to protect yourself from bad financial advice

If you want to make sure you’re getting trustworthy information:

Check for FCA accreditation

Find out if the individual or company giving financial advice or promoting financial products is regulated by the Financial Conduct Authority (FCA).

An FCA-regulated professional must meet minimum standards, so you can be confident that you’re getting expert advice based on your personal circumstances.

You can find out if a financial adviser or firm is authorised on the FCA website.

Do your own research

If an influencer is promoting a certain financial product, look beyond social media for reviews and comments.

Be wary of high-risk investments

Many influencers will promote high-risk financial products like cryptocurrencies or forex trading.

So don’t rush into any investments just because your favourite social media star is recommending them and promising quick returns, as you might lose lots of money if they go wrong.

They might have loads of followers, but that doesn’t automatically make them a financial expert who’s qualified to give you advice, so don’t take what they say at face value.

Check out our guide on getting financial advice to find out more.