Advisors may rely too much on what they consume on platforms
Twenty years ago, you might have created a MySpace profile but social media was certainly not a hot destination for investment news and information.
But in 2024 many of us use the myriad social media platforms for all kinds of information and for financial advisors it can be useful but also have a negative impact on the advice provided to clients, according to a new report from Ortec Finance.
The firm’s international survey of FAs and wealth managers, which included Canadian respondents, found that almost all said they are influenced by social media activity around the stock market and stocks.
More than eight in ten said they are becoming more influenced by social media, 14% very much so, but more than nine in ten admitted that the noise around the market and specific stocks makes it harder for them to give professional advice to clients because of how clients react to what they’ve seen on social media.
Earlier this year, the CFA Institute said that social media personalities will play a role in investments, and it called for policy changes to meet this new reality.
“Despite the many benefits that social media brings, our research shows that the noise around it is a hindrance to many financial advisors and wealth managers. With particularly the younger generation increasingly turning to social media as their source of information for everything from politics to DIY, they’re also using it as a source of financial advice,” said Tessa Kuijl, managing director of Global Wealth Solutions at Ortec Finance. “However, our research shows that social media is having a negative impact on many financial advisers and wealth managers themselves as well as hampering their ability to give sound professional advice to clients.”
A recent report from TD highlighted how younger Canadians are more likely to be targeted on social media by fraudsters compared to older people, with 41% of these young adults saying they have been a target and one third admitting to having fallen for the scam.
