A recent survey from Insurify found that 22% of Gen Z rely on TikTok for financial advice. According to data compiled by Pew Research Center in 2023, TikTok stood out for its user growth, as 33% of American adults admitted to using the platform, which was an increase of 12 percentage points from 2021. As social media platforms become more ingrained in our daily lives, it’s clear that we rely on them for more than just entertainment.
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Gen Z relies on social media for financial advice, but they’re getting financial information from many other sources as well. Here is where Gen Z gets financial advice and whether or not they can trust these sources.
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Top Sources of Financial Advice for Gen Z
According to the survey from Insurify, here’s the breakdown of what sources Gen Z uses for financial advice.
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Parents or other relatives: 41%
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TikTok: 22%
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Friends: 17%
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Financial advisor: 16%
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Doesn’t look at advice: 15%
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News sites and blogs: 15%
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Instagram: 14%
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Facebook: 11%
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X (Twitter): 6%
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Other social media: 1%
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Other: 1%
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Should Gen Z Trust These Sources?
The top sources of financial advice for Gen Zers are relatives and friends, social media, and financial advisors. But are these sources trustworthy?
Parents/Other Relatives/Friends
Relatives and parents are sources of financial advice for 41% of Gen Zers, whereas 17% of them turn to friends for money advice.
“For better or for worse, the financial decisions of parents and older family members result in the economic outcomes an individual experiences in their youth,” said Louis Brion, founder and CEO of Lakefront Finance.
It’s common to get financial advice from family and friends when you’re young, as these people instinctively want to help you. However, you must be realistic by assessing the track record of the person sharing the advice to determine whether it even applies to your situation.
“Family advice is great if it’s coming from a place of financial literacy, but there’s always the risk of outdated views being passed down,” said Michael Michael Panik, co-founder and chief information officer of Revise. “Most word-of-mouth advice is learned from a low-quality source, then passed on as high-quality info, with nothing to back it. We also find that people get advice that worked from the person who gave it to you, but it’s not universally applicable.”
Since everyone has investing goals and financial plans, you want to do your best to find specific advice that matches your expectations. You don’t want to be steered in the wrong direction because you took advice from a relative who didn’t understand your situation.
Social Media
TikTok, Instagram, Facebook and X all fall under one umbrella here, as many young people are on these platforms. The biggest issue with taking financial advice on these platforms is that the content is often designed to drive views, which may compromise the integrity of the information shared.
“Much of the advice is tailored to video retention and get-rich-quick schemes,” Brion said.
Social media significantly impacts how young people spend their money and approach personal finance. Hubbard warned that the harsh reality is that social media-driven consumerism can often overshadow long-term financial planning.
Plus, there is a lot of information on social media sites, which makes it hard to determine what is good advice from what is bad advice. “While social media may include valuable financial insights, it can also be a crowded space filled with vacation pics, expensive purchases and misleading financial information,” said Jared Hubbard, fintech product manager at Plynk. “This environment makes it challenging to discern credible advice from the noise.”
Panik noted that TikTok’s popularity for advice in particular is a double-edged sword. “It’s quick and accessible but not always accurate. It’s important to fact-check what you see there and always throw out any ‘get-rich-quick’ type advice,” he said.
Financial Advisor
“This is where the most reliable advice comes in, though it’s not as commonly used,” Panik noted. “It’s worth the investment if you’re serious about your finances. It also matters greatly that you know you’re working with a serious financial advisor, and not someone claiming that title without any accreditation.”
While a financial advisor could be the best source of information, Gen Z may not always be able to afford it and may not relate to a professional as they do to someone on social media.
How Gen Z Can Find Trustworthy Financial Advice
“Instead of focusing on what’s trending, take time to educate yourself on investment options, market trends and financial planning strategies,” Hubbard said. “Empowering your own financial literacy may enable better-informed decisions and help you navigate the complexities of financial advice. Relying on the wrong sources of information can lead to misguided financial decisions.”
Brion brought up how advice without context might not be relevant to the circumstance of the person asking for advice. “It’s great that Gen Z is looking for ways to improve their financial standing, and there can be great advice online through social media and their peers, but at the end of the day, the individual needs to think critically about all the advice they see, and follow through on the advice that best suits their financial situation,” he explained.
While Gen Z has access to more information than ever before, it’s important that they filter out the noise and seek out sources with a proven track record to make well-informed decisions about their financial future.
“Above all, it’s crucial to remember that if you don’t have a unique view of the market, you’re just gambling with your money. Indexes and funds managed by experts will always out perform your ‘hot picks,’ and leaning on them is the safest way to ensure growth in the long term,” Panik said.
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This article originally appeared on GOBankingRates.com: This Is Where Gen Z Gets Financial Advice — but Can They Trust It?
