Media literacy is the new financial literacy

One reason many young adults struggle to establish a financial footing is the overwhelming volume of information — ill-informed or worse — thrown at them every day. The digital world rarely supports the development of good money habits.

That challenge takes three main forms. Digital marketers use increasingly sophisticated algorithms to bombard consumers with goods and services. Social media platforms are crowded with financial influencers, not all of them reputable. And increasingly, people are using artificial intelligence to cheat and mislead Canadians.

“Younger people are up against it,” Chilton said. “No question about it.”

Start with digital marketing. If young Canadians appear more consumerist than previous generations, it is partly because they have grown up in an algorithmic world. Today’s teenagers are targeted by marketers to a degree never before possible. Advertising messages are delivered as “content,” served on devices and platforms designed to keep users engaged. There is little escape — certainly not compared with an era when consumers could simply turn off the radio or television.

“You’ve got these very sophisticated, always improving algorithms that are very adept at targeting our weaknesses — going after us to get us to spend our money … give in to impulse,” Chilton said.

The financial influencer issue is equally concerning. A study sponsored by Global X Investments Canada found that 70% of Canadian investors consume finfluencer content. Among that group, 79% have invested at least once based on what they heard or read. Of those who work with a financial advisor, 81% said finfluencers have altered that relationship.

We’ve recorded an interview with Stephanie Wolfe, the firm’s executive vice-president and head of marketing, for an upcoming edition of Canadian Advisor.cast. Watch for that next month.

The finfluencer landscape is nuanced of course become some of these creators are reputable. The Canadian Securities Administrators and Canadian Investment Regulatory Organization issued guidance on how existing securities rules apply to financial influencers and firms that work with them in December, so those committed to doing this properly have been given direction.

Not all will follow it, and many don’t care. Canadians’ ability to distinguish between good and bad actors in this space shouldn’t be assumed.

“It’s overwhelming,” Chilton said. “It’s very difficult for the average person to discern who out there is giving advice that [they] really should be grabbing a hold of.”

We reported in December on the rise in AI-enabled fraud, which David Rosenberg, founder of Rosenberg Research, experienced last year. An AI likeness of him was created to promote fake investment opportunities.

The deleterious effect of this technology on consumers can take even more insidious forms. If it has not happened already, your clients are likely at some point to receive an urgent message from a family member in apparent financial distress. It will be fake, but their ability to recognize that depends entirely on their awareness of how AI can be misused.

“If you think it’s noisy now, wait until 12 months from now,” Chilton warned. “All of these people out there — many pushing agendas, spreading false information, often selling courses or running outright scams. There’s a sea change coming, and a lot of it, unfortunately, won’t be positive.”

Add this to the growing list of calls to action for the advice industry. It is no longer enough to treat financial literacy as the sole priority. Media literacy — the ability to navigate an increasingly complex and often hostile digital environment — is just as important.

Advisors who help clients understand the media landscape with the same care they bring to markets and financial planning will be delivering a valuable and increasingly necessary service.

Canadian Advisor.cast is available in both video and audio formats, via Advisor.ca and Spotify.