TikTok is a swamp of bad financial advice, and experts are fighting back

Dr. Brad Klontz first heard about TikTok through his teenage nephews.

After they showed him animal videos, he continued to scroll and watch other posts. Shortly after, the financial psychologist, who helps patients manage money-related stress, came across a user promoting day trading.

“I was kind of blown away because I thought, wrongly, of course, that day trading died in the tech bubble when everyone lost all their money,” Klontz says.

“But there’s a whole new generation of people who think they can beat the market. And then I got worried, because I know how that ends.”

So Klontz, managing director of Your Mental Wealth Advisors and associate professor at the Heider College of Business at Creighton University in Nebraska, created his own TikTok account. The @drbradklontz account seeks to dispel all those get-rich-quick myths spread by thousands and thousands of posts on the app. Klontz has made it his goal to deliver credible content in front of young, impressionable viewers, Money.ca reports.

“I could create viral videos every day saying things like, ‘Buy this stock today and you’ll be a millionaire next week.’ I mean… people watch these videos, it’s very clickbaity; it’s is that everyone wants to become rich.

Klontz isn’t the only one who wants to dispel dangerous financial myths. Videos tagged with the hashtag #PersonalFinance have generated more than eight billion views. Financial TikTok, or FinTok, is one of the most popular areas on the platform, which can make it harder to distinguish between good and bad advice.

While there’s a lot of mediocre advice floating around these days, there are also knowledgeable, thoughtful voices like his who are happy to share much more boring (but effective) ways to build wealth.

Children are interested, but not educated

The strength of the stock market in recent years has led to a wave of young people interested in stocks and making quick profits. The GameStop fiasco in early 2021 is just one example of the stock-buying frenzy sparked by “memestocks,” company stocks that suddenly become popular thanks to online buzz.

A survey conducted by Wells Fargo in the United States last spring found that 45% of respondents said they became more interested in investing after the GameStop short squeeze frenzy.

A December 2022 survey by the BC Securities Commission also reveals that 18-24 year olds are more willing (compared to those over 25) to take more risks with their investments. This includes being more likely to believe that they can time the market and achieve a large profit through stock trading.

FinTok is full of articles on how to make or spend money, from experts and influencers. For the average user, it can be difficult to determine which advice is trustworthy, especially when the bad advice seems so appealing.

What worries Klontz is that young people may only be setting themselves up for failure – and major losses.

Financial education via social networks therefore seemed to be an opportunity to counter all this bad advice.

“You have two seconds to get people to stick around to see what you have to say,” says Klontz. “I found it to be like a professional challenge for me to take information about personal finance, psychology and money and try to make (videos) short, punchy and entertaining.”

His posts have helped counterbalance all that bad advice, and they come at just the right time.

Intentionally influence others

Millennial money expert Jessica Moorhouse started her blog in 2011 to document her own journey of figuring out her finances, but at one point she shifted her focus from her own self-education to helping others on their journey financial.

Moorhouse is particularly concerned about the advice people receive about cryptocurrencies. She says she was offered “a lot of money” to promote crypto, but refuses to do it.

“I’m probably leaving money on the table, but I don’t care,” she says.

Since launching her blog, Moorhouse has added a podcast, an Instagram account, and a YouTube channel, and financial education has become her full-time job.

“If this seems fraudulent to you, listen to that voice inside you…because this control is usually okay,” she says. “We all know what a get-rich-quick scam looks like; it’s been around for years. So a lot of it has to do with, internally, how do you feel?”

Help followers distinguish between good and bad advice

Although Klontz says the advice he gives to younger generations hasn’t changed in 20 years, the challenges young people face have changed as well. These days, misinformation spreads easily and quickly.

“There is no barrier to entry for who can put out a video on any topic,” Klontz says. “And with the younger generation, they don’t care about degrees as much as influence.”

On top of that, it’s easy these days to go viral or make a lot of money marketing flawed products or strategies, making it harder for consumers to discern between the “good” and “bad” ones. tips they see online.

Moorhouse says that’s why it’s so important to look beyond social media for information: read books, review the credentials of those whose advice you follow, and consume everything with a grain of salt.

“It’s a bit like the fitness industry,” Moorhouse says. “You have to be very careful who you follow and trust…are they going to give you bad information about meal planning, diet and exercise because they’re not actually trained to become a personal trainer?

And the apps themselves are starting to take part in the conversation. In fact, TikTok has been working with Klontz since 2020 as part of its #LearnOnTikTok initiative, helping it learn how to get its educational content in front of more people.

But the best thing about Klontz’s TikTok fame is the reaction from her nephews and other young relatives.

“’I’m the cool uncle, which is really cool,’” Klontz says. “I have a certain influence: some of my cousin’s children, when I’m around them, look at me as if I were a celebrity.”

Better yet, they come to him for financial advice, which he is always happy to share.

This story was produced by Money.ca and edited and distributed by Stacker.