The pros and cons of social media for advisers

The pros and cons of social media for advisers

There is a danger of a "moral panic" in financial services over the use of social media, according to the latest edition of the FTAdviser Podcast.

Last month the Financial Conduct Authority warned that social media platforms were playing an increasing role in putting consumers at risk of harm through adverts for financial products and the rise of financial influencers - or "finfluencers".

Advisers aren't immune either, with the regulator expressing concerns that the use of certain social media platforms by advisers wasn't always helping consumers.

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Speaking on the latest edition of the FTAdviser Podcast, Alasdair Walker, managing director of HA&W, said: "I've got perhaps a unique perspective on this because I am quite heavily involved in a Reddit community that is all about personal finance in the UK and for all of the talk of young people online getting terrible information via social media,

"I like to think that the community we have, which now has more than 410,000 members disseminates very sensible, repeatable, helpful information to people.

"It is an incredibly sensible community so there is a little bit of a moral panic vibe about 'oh, it is all these terrible things online'."

Walker pointed out that the r/CanaryWharfBets Reddit group, which is the UK equivalent of r/WallStreetBets which was behind the GameStop short squeeze, only had 7,400 members.

Hugh Johnson, head of proposition delivery at Sanlam, said: "I think that you can't categorise [the use of social media] either way at this point. The first and most obvious example everyone is talking about is the GameStop craze and crypto pushing these massive returns and a lot of rhetoric which sounds like 1990s penny stock pushing.

"Clearly that is a dangerous thing and my fear is that young investors in particular, who tend to be the audience of these platforms will get their fingers burnt early and be put off investing for life.

"But more interesting for our space is a growing number of finfluencers who in my view are actuallu getting it half right. This relates to things like the Fire movement - Financial Independence, Retire Early - which is basically founded on some fairly sound investment principles such as diversification and also financial discipline so I think there is opportunity in that and we as an industry should be watching that closely and learning from it."

To listen to the full podcast click play on the player above. FTAdviser's podcasts are also available on Apple Podcasts, Spotify, Stitcher and Acast.