The new episode of Canadian Advisor.cast features an interview with Stephanie Wolfe, executive vice-president, head of marketing at Global X Investments Canada Inc. We talked about the growing popularity of financial influencers, a marketing resource the company has relied on for years.
Global X commissioned a study of 306 Canadians, each with a minimum $10,000 in investible assets, conducted last summer by Research + Knowledge = Insights. It was designed to understand what investors think about finfluencers and how closely they follow them.
“We have noticed, over the last decade, obviously a shift in how Canadians are consuming [financial] content,” Wolfe said. “Social media is there for everybody, and it’s become a mainstream part of our everyday lives.”
Seven in 10 survey respondents said they take in finfluencer content. Given the sample size, we’re only talking about a couple of hundred people here. Consider the numbers directional.
Among that group, 89% took some action as a result of what they heard — they talked to their advisor, updated their investment strategy or started saving more. Four in five (81%) said it’s changed the relationship they have with their advisor.
About the same percentage (79%) have made at least one investment based on what a finfluencer told them.
“They weren’t just passively scrolling,” Wolfe said. “No matter where they were going for this information, there was action that was taken.”
The study found that nine in 10 who made an investment were glad they did so. Given how markets have performed in recent months, that’s not surprising.
What’s more important is the quality of information shared by finfluencers, which is clearly uneven.
For every Ben Felix there is a James Domenic Floreani, who was sanctioned by the Alberta Securities Commission last fall for engaging in investor relations without properly disclosing that he was hawking companies that had put him on their payroll.
And for every Felix and Floreani, there is an unknowable amount of would-be experts whose primary goal is digital clout. They make up a mushy middle of the finfluencer world that in all likelihood fails to move the financial literacy needle in a meaningful way.
The Global X study found that of the 94% of Gen Z respondents who consume this content regularly, a third prefer it to be under a minute in length (the same was true of 16% of boomers, so don’t judge). Best case scenario, we’re talking about edutainment.
“There isn’t a whole lot that can be consumed in less than one minute that [is] educational in nature,” Wolfe said.
To be fair, Wolfe told me that Global X is careful about which finfluencers it partners with, and it runs all posts by legal and compliance for approval. “We want to make sure that we’re giving Canadians the right information that they can then use to make informed decisions,” she said.
Me and a dead horse
Last summer, I accepted an invitation to speak at a conference for financial services marketers, to talk about why they should stop hiring finfluencers. What my argument lacked in impact, it more than made up for in righteous indignation.
Rather than continue on that dead horse, four (hopefully) productive thoughts:
- Spend more time on social media. It’s mostly garbage and clearly addictive. But it’s where your clients are getting investing and other financial information. You’ll be better able to manage those discussions if you know what your client is talking about.
- Don’t make your clients feel embarrassed about using social media. If financial content resonates with them, that is mostly a positive. It’s especially good that they’re talking about it with you. Your client is engaged.
- Bad actors deserve stiff punishment. Our Matthew Taylor reported in October that Floreani was hit with a two-year market ban, a joint administrative penalty of $30,000 and costs of $10,185.10 by the Alberta Securities Commission. Peanuts compared to the roughly $300,000 he earned in promotional payments, restricted shares and subscriptions. That’s unconscionable.
- Get in the game. TikTok would be a better place if more financial advisors had channels. YouTube too. Be part of the effort to make social media content better, and win new clients in the process. To our friends in legal and compliance departments — same message. You have a valuable oversight role to play in extending the professionalization of the financial advice industry further into the digital arena. Facilitate; don’t block.
“Advisors … came out heads and shoulders as the number one trusted source,” Wolfe said. “Social platforms are becoming a primary source of news for these younger adults. So it’s not something that I think we can ignore. I think that we have to adapt and grow as these younger generations start to mature in the next decade or so.”
Canadian Advisor.cast is available in both video and audio formats, via Advisor.ca, Spotify, Apple Podcasts and YouTube.