Social media is more important than ever for retail investors
Author: Max Rothery, VP Community at Finimize
Recent BNY Mellon and World Economic Forum research shows that 53% of retail investors turn to social media for information. See, quick-scroll sites are increasingly becoming the go-to spot to research investment ideas and find inspiration, mainly thanks to their bite-sized format and easy access. That’s doubly true for younger investors: Ofcom – which monitors news consumption in the UK – found that TikTok’s reach for news has increased from 1% in 2020 to 7% in 2022, especially for younger folks aged 16 to 24. And it’s roughly tripled in the US, rising from 3% in 2020 to 10% in 2022, according to Pew Research.
Now, there’s a misconception that retail investors will blindly follow unqualified financial advice on TikTok. That’s not necessarily the case. Investors I speak to on a daily basis use social media to curate a personalized information feed that fits neatly into their busy lives, it's true – but social media is often just a jump-off point. If the headline is interesting, they’ll dive deeper. Investors know they should be skeptical of the information they find on social media, with those platforms scoring relatively poorly on attributes like trust. Only 25% of retail investors rate social media information as "important" compared to a chunky 47% for financial advisors. But to put that into context, data shows that half of US adults under 30 only trust information from social media as much as they trust national news outlets.
Investors use community insight to turn social media-inspired ideas into action
After retail investors get inspiration and ideas from social media, they turn to communities for validation. At Finimize, we see our one-million-strong community interact and research across a myriad of channels every single day. Over 94% of Finimizers say they consult their peers – be it friends or virtual communities – when making a financial decision. That's why we run online and offline events: so retail investors can interact with experts and ask them their questions. And over time, we've seen over 150 WhatsApp groups – that's a whopping 12,500 premium members – continuously buzzing with new ideas.
How Finimize uses social media
Social media is a “spark'” that can get someone interested and passionate about a topic – and at Finimize, we provide the right platform for our community to then dive into more in-depth and quality research. Our expert in-house analyst Insights and curated feed of quality information are designed to empower retail investors and help them make better financial decisions.
To do that, we use our gut – and a heck of a lot of data – to experiment with creative approaches, formats, and channels. We currently manage five core social media channels: LinkedIn, Instagram, YouTube, Twitter, and TikTok, and we’re building up social presences for our world-class analysts. We published 265 pieces of content in just one month in 2022, and we'll continue to experiment every day. But this part won't ever change: all of our content is designed with our community's needs in mind: entertainment, education, inspiration, and in some cases, validation.
- Timely and breaking news via market updates
- Educational, jargon-free breakdowns via Insights, opinions, and events
- Aspirational profiles with real-world case studies
- A ton of entertainment, with our witty tone and dazzling personalities (right, guys?)
Brands have an opportunity to leverage social media and build a community of trust
Retail investors want to learn, and doing that little by little – "micro-learning", if you go for that – is an effective and enjoyable way for them to do just that. That opens up a huge opportunity for financial organizations: create a space that fosters idea generation through social media, but also allows investors to validate their ideas through community and data. To do that, brands will need to nail how they communicate on social media, build a community based on trust, and – most importantly – work to stay top of mind for retail investors.