Social Media Plays An Increasingly Important Role for Retail Investors
Author: Max Rothery, VP Community at Finimize
Recent research by the BNY Mellon and World Economic Forum shows that 53% of retail investors turn to social media for information. 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: in fact, 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.
There’s a misconception that retail investors are blindly following unqualified financial advice on TikTok, but that’s not necessarily the case. The investors I speak to on a daily basis use social media to curate a feed of personalized information that fits neatly into their busy lives. But social media is often just a jump-off point: if the headline is interesting, they’ll dive deeper. They’re acutely aware that they should be skeptical of information sourced solely on social media, with those platforms scoring relatively poorly when tested on attributes such as trust. And get this: only 25% of retail investors rate social media information as important, compared to a chunky 47% for financial advisors. But put that into context: data shows that half of US adults under 30 say they trust information from social media as much as they trust national news outlets.
Community Inspire Action
If social media is where retail investors get inspiration and ideas, the community is where they go for validation. We witness this daily at Finimize, where we see our one-million-strong community interacting and researching across a myriad of channels. In fact, over 94% of Finimizers say they consult their peers – whether that’s friends or virtual communities – when making a financial decision. We create opportunities through online and offline events, where retail investors can interact with experts and ask their questions. We also see a lot of exploring and learning within our 150 WhatsApp groups – holding a total of 12,500 premium members – which we moderate on a daily basis.
How We Use Social Media at Finimize
We think of social media as a “spark'” that gets someone interested and passionate about a topic, and we believe we’ve built the right platform to help our community dive into more in-depth and quality research with our expert in-house analysts’ Insights. After all, our primary focus is on building trust by providing a curated feed of quality information and empowering retail investors to make better financial decisions.
We experiment with the creative approach, formats, and channels and use our gut and data to do that. We actively manage five core Finimize social media channels: LinkedIn, Instagram, YouTube, Twitter, and TikTok, and we’re also slowly building a social presence for our key personnel. All that content is aligned with the needs of our audiences: entertainment, education, inspiration, and in some cases, validation. We published 265 pieces of content across the channels in October 2022 alone, and we’ll continue to experiment and evolve our approach daily, weekly, and monthly.
- Keep me up to date --> Market updates, breaking news
- Educate me --> Insights, opinions, events
- Inspire me --> Real world examples
- Entertain me--> Memes
Social + Community = Opportunity To Improve Financial Literacy For All Retail Investors
Creating a daily habit of micro-learning about investing – and remembering the context of what’s going on in the world – is a great way for retail investors to build financial knowledge over time. However, it’s critical to create an ecosystem where they both get inspiration and ideas like they do from social media, as well as find a space where they can validate their ideas through the community. The opportunity remains open for financial organizations: they need to figure out how to communicate on social media, how to build a community of trust, and – most importantly – stay top of mind for retail investors.