2 Big Problems With #FinTok

#FinTok on social media platform TikTok has over 1.6 billion views.

When it comes to finances, Americans typically rely on friends, family, and school for their financial education. But what if your family and friends don't talk about money, and financial literacy classes aren't in your curriculum? Like over one-third of Gen Zers, you might turn to TikTok for advice.

A bad influence

Like every other social media website, influencers are a big part of what makes TikTok great. Influencers create content, engage with fans, and reach thousands or even millions of users on the site. However, some influencer accounts on #FinTok are good, some are bad, and some are downright ugly.

Let's acknowledge one thing first: There exist some great personalities on the finance side of TikTok. Tori Dunlap of @herfirst100k, Humphrey Yang of @humphreytalks, and Vivian of @yourrichbff all produce timely and objective content geared towards the young investor. These influencers make #FinTok an engaging place to learn about personal finance.

Unfortunately, these creators aren't the only ones getting widespread attention. Creator Curtis Ray has netted millions of likes selling an insurance product. In his videos, Curtis discourages users from saving in a 401(k) or Roth IRA. How does Curtis recommend saving for retirement? He encourages his followers to buy his product, and he isn't alone. Hundreds of creators on the site sell life insurance, real estate investing courses, NFTs and more, spreading misinformation in the name of a sale.

But there are far worse actors than those pushing products. Cryptocurrency pump and dump schemes have gained increasing popularity in recent years. In 2021 alone, over $2.8 billion worth of crypto was stolen in these so-called "rug pulls." New investors lacking essential cryptocurrency education, like many TikTok users, make an enticing target for cryptocurrency scammers.

Show me the credentials

In the financial advice industry, it is common to see an alphabet soup of letters trailing the last name of credentialed professionals. What's the trouble with #FinTok? Few creators have or use credential marks.

In the financial services industry, it can be difficult to make sense of financial credentials. Even harder is knowing who to trust when credentials aren't obvious. While some creators, like Nick Krop of @nickthecpa, make it obvious that they are credentialed, it is the exception, not the rule, to know a creator's professional designations. One reason that designations may be hard to find is that credentialing bodies do not allow that usage of their marks. For example, the CFP Board, which administers the CFP^® mark, does not allow the use of the mark in social media usernames or hashtags. Another reason credentials can be hard to find? Many creators don't have any.

The only verification which TikTok offers is a blue check mark for certain large accounts. TikTok verifies accounts based on a number of criteria, but does not audit accounts for incorrect or misleading information. When deciding who to trust on TikTok, the blue check mark can only get you so far.

When it comes to learning the latest dance moves or how to make a bath bomb, TikTok can be a great place. However, trusting the platform for financial or tax advice can land you in a world of hurt. Until TikTok better moderates its financial content, it's best to talk to a financial advisor instead.