Like, share, invest: The rise of social media's finfluencers — and what it means for advisors

In the world of professional wealth management, the term "financial influencer" is unlikely to conjure many positive feelings. But for advisors, ignoring these often popular creators could mean missing out on opportunities to connect with next-gen investors and future clients. 

Besides the gaudy jewelry and the rented Lamborghinis paraded across TikToks and Instagram Reels to signify wealth, many so-called finfluencers have more than their fair share of cringe-inducing behavior, from selling "get rich quick" online courses to hawking crypto scams.

Still, it would be a mistake to dismiss the entire finfluencer niche. As with any large group, the finfluencer community is far from a monolith. Along with the less-than-savory characters in the space are plenty of creators who are passionate about personal finance, budgeting and investing.

READ MORE: 5 lessons for financial advisors on how to become 'finfluencers'

Here, in this often overlooked side of the online personal finance space, you won't find much in the way of "100 bagger" alt-coins (with supposed 10,000% returns) or passive-income drop-shipping businesses. Instead, creators are teaching their audiences about budgeting tricks, low-cost ETFs and 401(k) matches. 

Financial advisors should be mindful of this shift in how younger generations are receiving financial education and developing their savings goals. After all, these finfluencers are shaping the financial literacy and expectations of potential future clients.

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Angelo Castillo, a personal finance content creator who goes by "Profitplug" on social media, started gaining a following from posting videos online about his business flipping books on Ebay and Amazon.

"I was really transparent with what I was doing, all the mistakes I was making, and, you know, the things that I was kind of learning along the way," he said.

Castillo, who has amassed over 1.6 million followers across TikTok, Instagram and YouTube, now covers everything from investing and budgeting tips to side hustle businesses. 

Castillo earned a bachelor's degree in business administration from San Diego State University, but he said he doesn't feel the program taught him much about the topics he makes videos on now. 

He's far from alone. Across the 11 finfluencers Financial Planning queried, just over half said they did not have any certifications or professional training in finance. Castillo said his lack of professional credentials has given him pause when creating content.

"I get really big impostor syndrome, [thinking] like, 'Why would anyone listen to me? I have no credentials,'" he said. "I try to kind of stay in my lane, talk through my personal experience, reference other articles, surveys, other professionals, but also [include] my personal experience, because personal finance is personal for a reason."

Finfluencers say that keeping their content personal is key.

Lillian Zhang

"A lot of my video topics come from my personal experiences because for me it's easier to talk about something if I personally lived through it," said Lillian Zhang, a personal finance content creator with nearly 250,000 followers across her TikTok and Instagram pages. "I think a lot of young people enjoy, or would rather listen to, someone who has gone through their experience [more recently], where it's more relatable for them, rather than having some authority figure talk to them like a professor or a teacher."

Taking that approach has its benefits, but finfluencers say it fails to garner the level of engagement that flashy, "get rich like me"-type videos receive. 

"The problem is algorithmic social media, which is designed to elicit a very strong emotional response," said Barry Ritholtz, co-founder of Ritholtz Wealth Management in New York. Ritholtz, whose new book "How Not To Invest" breaks down the fire hose of bad financial advice from experts, media personalities and influencers, said that social media algorithms tend to highlight creators who flaunt envy-inducing material items.

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"If you're driving down the road and you see a beautiful, big house with an expensive car in the driveway, a lot of people's initial reaction is to become envious, but you have to understand the full picture," Ritholtz said. "Did they go deeply into debt to buy that house? Do they have a giant mortgage that's crushing them? Are they buying a car they really can't afford to show off at the club?"

Social media videos "selling the dream" often have a higher chance of going viral, according to Kevin Jiang, a content creator known for his bespoke budgeting templates. 

"I try not to push myself toward that way because then I'm not being true to my audience and my channel," said Jiang, who has nearly 600,000 followers across his Instagram and TikTok pages.

Creators like Jiang and Castillo are quick to acknowledge the opportunists in the finfluencer space, but they're also enthusiastic about the many creators who are genuinely interested in personal finance. 

"There are a lot of good creators out there who are just trying to help, trying to tell their story and trying to benefit your community," Castillo said.

Institutions join the club

As the online personal finance community has grown, legacy media outlets have worked to carve out their own space.

To see which videos were pushed by TikTok's algorithm, Financial Planning analyzed the top 250 videos shown under the app's #personalfinance feed. Videos from individual creators like "calltoleap" and "tobinwtang" appeared dozens of times, but a handful of legacy brands like The Wall Street Journal, CNBC and Bloomberg managed to cut through too.

Videos from these channels don't contain much business or economic news like one might expect from legacy media outlets. Instead, these brands are following the lead of individual creators like Zhang, Castillo and Jiang.

A popular video from The Wall Street Journal's TikTok account starts with the caption, "I'm 37 and haven't saved enough. What do I do?" In the video, Will Flannigan, a senior SEO editor at the Journal, walks through a park as he talks about the financial missteps he made in his own life, weaving in industry guidance on retirement saving milestones along the way.

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Remove the "wallstreetjournal" username from the video and you'd be hard-pressed to see the difference between Flannigan and any number of other vlogger-esque financial influencers on the platform. Finfluencers say that's a good thing.

"People want to learn from someone who's relatable and not necessarily like a teacher," Castillo said. "Because they invest into the person."

From advisor to finfluencer

Gen Z investors say that social media is their No. 1 source of information for financial topics, according to research from the FINRA Foundation and the CFA Institute. Yet few financial advisors are jumping at the opportunity to create their own social media channels — and no, a LinkedIn post doesn't count. 

And why would they? Between regulatory boundaries and the sheer time commitment, becoming a genuine content creator can require countless hours of work, all for the opportunity to attract an audience of 20-somethings with little to no investable income.

Why should advisors bother? If you ask Ritholtz, it's all about meeting future clients where they're at.

"You want to really be thoughtful about the reputation you're building on social media, because you want your clients, especially in the future, when they come into real money, either because their business succeeds, or they inherit money, or their company goes public, or whatever it is, you don't want them to think of you on TikTok or Instagram as someone who's frivolous and not worthy of real money," Ritholtz said. "The last thing you want [someone to say] is, 'I'll work with this guy when I have a $100,000 portfolio, but as soon as I have a million dollars, I'm going to a real advisor.' So, be conscious of the brand you're putting out and the reputation you're creating, and be a long-term thinker. Play the long game. That's how you win."

Financial advisors who refuse to play that game could quickly lose out against a growing body of free financial information online.

Across 11 different financial influencers, we asked if they thought it was still necessary to hire a financial advisor, given the amount of free personal finance information available online. A majority of them gave a resounding "Maybe," with the remaining creators evenly split between "Yes" and "No" with two each.

That's hardly surprising. Financial advisors themselves say that whether someone would benefit from a professional planner depends on their personal circumstance. But that ambivalence can also be an opportunity for advisors who are willing to extend a hand to young people on social media.

READ MORE: The industry's opportunity to work with new Black and Hispanic investors

A majority of Gen Zers say they would prefer a financial advisor over a robo-advisor but often stop short of hiring one because of misconceptions about the industry, according to a survey of 1,500 Americans from MagnifyMoney. 

A quarter of respondents believe they don't need a financial advisor until they reach middle age, the study found. That perspective was particularly common among younger generations, with 44% of Gen Z participants sharing that view.

Those findings may sound disheartening to some advisors, but they also highlight areas of growth for those who can connect with younger generations on social media and invest early in their financial lives.

Offering a seat at the table

Creators like Zhang and Castillo say finances were rarely a point of discussion growing up. They're hoping to change that with their content.

"I kind of wanted to be like the mentor that I wish I had," Castillo said. "Because I grew up with immigrant parents, we kind of had a very negative connotation towards money. No one really talked about it. I had to kind of learn everything myself through a lot of trial and tribulations, so I just wanted to be that, I don't know, beacon of hope to other people who may be confused."

Zhang, who said she didn't grow up in the best socioeconomic situation, echoed that sentiment.

"I think it's just a way to open up the conversation more broadly to people who might have not considered listening to this type of topic if it weren't for social media," she said.