Headline: What is FinTok?


Body:  Ok, confession time.  I’m 46 years old and I watch a lot of TikTok. (The Dreadnaughts sing, “old Mauii” and it is fantastic!!!)  I find it interesting to be able to really  interact with the content in a very personal way.  Others apparently feel similarly positive.  Over the months, several communities have sprouted, each with a 3-letter word tied to “Tok.”  For instance, the community aimed at veterans and members of the military, there is “MilTok.”  (I can only assume that there is a community for social media people called “ClickTok.”  Perhaps there will be soon.)  Imagine my surprise to find that there is a financial industry community called “FinTok.”  (Not sure what the people from Finland use.)  My questions are simple.  First, is this really a thing?   Second, if it a thing, can we learn from it to eventually make money from it?  (For the remainder of the entry, it might appear that I impugn the integrity of anybody giving financial advice on TikTok.  I’m not.   Many are good-hearted people who believe deeply in their own information.  However, I DO, mean to skewer any financial “guru” who claims to have the “one secret for ANYBODY to get rich!!”  It doesn’t exist.)

In times past (i.e. my childhood) investment advice and maxims came from my dad.  For centuries this has been the way, and for some reason, we have assumed that women are not up to the task (turns out, they’re better at it.)  Back then, it was “cool” to hear a co-worker talking about a “hot stock pick” and then go home, call your broker and make the (probably ill-advised) trade.  As generations go on, the technology improves and now, this generation is over TV.   They want their advice to come from the social media channels they spend so much time and energy on.  Enter FinTok.

Unsurprisingly, you usually find the flavor of the month here.  Currently, it’s all about cryptocurrencies, and in recent days, it’s all been about real estate investing.  (Oddly, the same people can sometimes be seen hawking both using VERY similar logic.)  But, on occasion, you do come across some good stuff, especially videos about business.  There is one REALLY smart guy who owns a septic company on the East Coast.  (Septic pumping?   Yes, septic pumping.  And the business related conundrums he asks his audience about are some humdingers.)  There are others who suggest that there are savings to be made using different sites to find discount codes.  These are all good and interesting to watch, but before making purchases or lifestyle changes to institute these changes, seriously ask yourself it it’s a good idea or not, for YOU!!  Remember, you are not a notional character.   You have past experiences, biases  and beliefs that have to be taken into account when instituting behavior changes.

This is  just another marketplace of ideas, so, that’s fine

Well, yes and no.  Certainly they should have the right to put up their content.    But, the problems begin to come into focus when people try to execute on the strategies they learned on FinTok.  Problem is, you might very easily have a reasonably well- educated person giving commonsense financial advice, let’s say, in Australis.  If a 20-year old in the U.S. tried to execute on this advice, they’d likely lose pretty big.  The financial systems are pretty  similar, but when you get into the weeds, there are some details that make the advice given to any client, very different within the U.S. v. in Australia.

I understand that the GenZ aged people are just trying their best, using the tools that are so familiar to them, to fill a gap in their education.  I actually salute them for going on this journey.  But, if given just a short segment on being a  critical thinker, they might come to notice a very large conflict of interest here.

Have you ever been reading a  magazine, and you have read 2-3 good articles, and happen upon what you think will be the 4th well-researched article.   And, it does look the same, same typeface, a few high-value pictures, but all of the stories seem to be about the country of Qatar or the caring professionals at Astra Zeneca.  Now, your spider senses are tingling, any you scan to the top.   In the middle of the top margin, it says, “Advertorial.”   This means that the “article” was provided by a sponsor.  Though the information might be accurate, the point of view might not be held by many people.    TikTok can have many of the same kind of things.   I can’t tell you how many videos of cute puppies, then the voice starts,”You want to keep these puppies safe and healthy, right?   Feed  them Farmer’s Best.”  Thus it becomes pretty obvious which videos are most likely to be… perhaps biased.  The problem is, that in the FinTok areas, the creators are not required to label their videos as sponsored content.  The video might introduce a lot of different investment opportunities, but, oh, guess what?  You can get them ALL thru USAA!!  Perhaps you can get these investment opportunities from Morgan Stanley.  I pick on these 2, but it could be any of the thousands of other companies.  The point is that  within social media, the FinTok area is very like the Old West.  Both possibility for striking it rich, and the probability of hurting yourself exist

OK, this has to be addressed

For centuries now, the field of finance has been almost exclusively the province of men.  Women can understand an teach financial lessons just as well as men can.  (They can also be prosecuted for financial crimes, just like the men.   This law-breaking potential is very equal opportunity.  But, the fact cannot be denied.   To this point, most of the self-appointed personal finance gurus have been men.   So, some women (some VERY well-qualified, some less qualified) have taken TikTok as an opportunity to close this gap.  But, it’s very tricky to evaluate the advice giver (always.)  On TikTok, this can be made impossible, and those who even try to independently vet these financial gurus are in the tiniest minority.  This critical reviewing of information has never been more… er…um…CRITICAL!!

This being careful about information obtained should extend beyond TikTok too.  (I once had a really good chart of the financial abbreviations people put after their names.    This can be really confusing because there are only about 200 different credentials.   Some require much study and perhaps night school.   Others, all you have to do is say, “Goodnight, school!” and you are now  qualified to use the abbreviation after your name.   I cannot believe how many of the certifications demand little to no training.  (As I recall, it was nearly half of them.)  So, please be careful about the information you take as gospel.   (Unless you’re on my page.   You can TRUST that source.)


This is what the financial influencers on TikTok calls themselves.  But other countries have been presented with this problem too.  In Australia, for instance, a number of regulations have been considered and most were rejected.   The minister for financial services called them, “an inevitable part of a financial ecosystem.”  They also struggled with these  questions, as she identified the crux of the problem in the following manner.  “The bloke at the pub, for one thing, does not make money from his talk.”  But, many social media influencers do.   I really like dogs and follow this woman who has 2  extraordinarily cute golden retrievers.  She has a series of wonderful videos of them in the pool, on walks and in the ocean.   Just recently, she began introducing the corporate name behind the doggie beds they have.  Some might say she’s sold out.   It’s my judgement that you just have to exercise some of your own.

Beware of 3 red flags:

Do not assume that more followers means more credibility for that source.I know a guy online with well over 1,000,000 followers and I would ascribe to him a high level of credibility.   I also know of a lady who has less than 5,000 followers, and she’s equally credible, to my view.  I know of one guy with well over 2,000,000 followers and I wouldn’t trust him to be credible, ever.
Why are they sharing valuable secrets with you for free?If their process or product is SO good at earning money, why are they offering to explain it to you for FREE?
 Beware of all people offering a get-rich quick plan.Get rich quick schemes do work.   They work very well for the “guru” who is trying to sell a book or set of DVDs.

The Verdict

So, I guess the question we windup with is, “Is it safe to use social media as a way to educate ourselves on financial matters?”  And I guess the answer goes something like, well it’s a great place to start.  But, many professionals agree that they are unsure of themselves within this environment.  “TikTok is the opposite end of spectrum from the 20-page whitepapers that we are very good at producing,” laughed Rich Latour, BlackRock’s global head of content.    So, I guess the best answer is that we should all become very much aware of the credibility of the sources we listen to.






Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.


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