TV, the radio, online news outlets, newspapers, podcasts, social media, the list goes on... You’d be hard-pressed to find a medium that doesn’t talk about money these days. The information is there but what is worth paying attention to?
With a variety of content at our fingertips, it’s vital to differentiate between opinion and trends (that could lead you down the wrong path) or evidence-based thinking that could benefit your financial plan.
There’s a growing trend of people increasingly turning to social media for investment ideas, even as the Financial Conduct Authority (FCA) begins to regulate the field of finance influencers – or ‘finfluencers’ as they are often known as.
According to a new survey commissioned by Hargreaves Lansdown in May 2023*:
Responding to the Hargreaves Lansdown study, an FCA (Financial Conduct Authority) spokesperson said that although social media has helped firms reach a mass audience more quickly, the regulator wants to “ensure that consumers can access high quality marketing information that enables them to make informed financial decisions.” It expanded, “we are updating our social media guidance to firms to clarify what we expect when marketing financial products online".
Whilst social media has great potential to close the financial education gap, we’d advise you to err on the side of caution when taking advice on money. The examples below are case in point – they don’t account for personal situations or objectives and focus largely on a short-term outlook, with little capacity for changing circumstances over the long-term.
Not all investments will be fully protected by the FSCS (Financial Services Compensation Scheme), and unfortunately, there are some scams circulating online.
As a business, we are committed to removing the advice gap and have a lower cost service for young professionals who want some one-off guidance. Our Check-In service is a review to ensure you're making the most of your savings, investments, and pensions. We can help you set these up if needed, but the main aim is empowering you to manage your own finances.
Feel free to drop us an email or pick up the phone, if you feel this could be useful.
Across all forms of news and media, the key to deciphering whether it is worth listening to is putting yourself in the shoes of who is writing or speaking. Consider a headline telling you about an extremely lucrative stock – why would a journalist or content creator give away such critical financial information for the price of their salary or a sponsored ad? Likewise, a news outlet wouldn’t give away the same for the price of a newspaper or subscription.
In summary, don’t rely on attention-grabbing headlines for financial guidance. If it is advice worth knowing, you would need to pay a high price for it.
Publications with a credible reputation such as the Financial Times often share an unbiased overview of what is happening in the market. It has loyal buyers, requires a paid subscription to read, and writers who want to sustain their reputation in the financial field. It doesn’t need to fight for reader attention by using shock tactics like other outlets.
Although the FT often reports in real time rather than a long-term outlook, so take it with a pinch of salt. The markets change daily, but the real growth comes over time.
In contrast, outlets like the Daily Mail are pitched to a mass market, free to read, and rely on attention-grabbing tactics. So, they need to exaggerate to pull in readers and sell advertising space. Not the unbiased, steady, stable source you’d expect to take financial advice from.
Dimensional Fund Advisors is a leading global investment firm that shares the same philosophy as us – using evidence-based, diversified portfolios. They have useful stats and infographics on market performance and financial science that can be applied to your monetary objectives.
You can find insights in the links below but we also have plenty of Dimensional resources – get in touch if you’d like us to share some with you over email.
https://www.dimensional.com/gb-en/individual
https://www.linkedin.com/company/dimensional-fund-advisors/posts/?feedView=all
The key takeaway?
Learn how to tune out the noise and tune in to what matters. Remember that, usually, ‘the markets know more than me’. They will fluctuate in ways we cannot predict. That isn’t cause for worry, though: stick to your financial plan, base it on sound theory, and underpin it with your personal values.
While every investor’s plan is a bit different, ignoring headlines and focusing on time-tested principles may help you avoid making shortsighted missteps.
*Opinium survey of 2,000 people commissioned by Hargreaves Lansdown, a British financial services company.
