Unverified: Half of retail investors don’t carry out regular checks when using finfluencers’ guidance

• A quarter of Brits are turning to social media, community messaging apps and online forums for investment guidance
• Over half of investment scams take place on social media, according to Barclays data
• Three quarters of retail investors want social media platforms to introduce a verification system for finfluencers, to help them identify genuine accounts and guidance
• The Bank shares simple tips to help investors verify a finfluencer’s credentials and content

New research from Barclays reveals how half (51 per cent) of Brits who use social media for investment guidance are putting their confidence and money at risk by not always carrying out checks to verify the reliability of finfluencers and their content¹.

The findings also demonstrate a need to improve the transparency of finfluencers' credentials, with three quarters of investors (73 per cent) wanting social media platforms to introduce a verification system for influencers promoting financial content.

Social media filling the advice gap

Barclays surveyed over 2,000 UK adults to uncover their experience of and attitudes towards investing, with a focus on how and why investors are using social media to fill the advice gap. This is the “gap” between consumer demand for investment advice and the number who can currently afford it – with regulation currently limiting how banks can support potential investors without crossing the boundary between free guidance and expensive, regulated advice.

The findings showed that a quarter (23 per cent) of Brits are now turning to social media, community messaging apps and online forums for investment guidance. One in five (19 per cent) do so because it provides them with “free access to financial experts”, with a quarter (26 per cent) thinking that it is “quick and easy to use”, and the format of content “easy to digest” (19 per cent).  

Young people are even more likely to use social media in this way, with close to four in 10 (37 per cent) going to these channels for investment support. TikTok is the most popular platform among Gen Z (46 per cent of 18-24), while Millennials (aged 25-44) and Gen X (45-54) prefer Facebook. In contrast, very low numbers of ‘Boomers’ (55 and over) seek investment guidance from social media, perhaps because they are either less active on these channels or willing to pay for a financial advisor.

*According to those who go to social media or online forums for investment information

Risks of social media and investment scams

While many investors are turning to social media for financial guidance, less than half (49 per cent) always check that the information they receive on these channels is from a reliable source – such as an accredited professional or experienced investor. This may be leaving them at risk to unsuitable investment decisions or even scams.

Clare Francis, Director of Savings and Investments at Barclays Smart Investor, said: “Our research shows that a quarter of people don’t know how or where to start investing, with growing numbers turning to social media for this support. These platforms clearly play a positive role in making investment information more relatable, but they also come with risks. It can be difficult to work out which accounts are trustworthy and run by experienced financial professionals, so it’s worrying to see that half don’t carry out regular checks on finfluencers. This puts them at risk of making unsuitable investment decisions or even falling victim to investment scams.”

Barclays research shows that two in five (39 per cent) young people (aged 18-24) feel unsafe on social media due to the prevalence of scams, and the majority – 73 per cent – want tech firms to do more to stop scammers operating on their platforms². Given that Barclays data shows that over half (52 per cent) of investment scams take place on social media³, it’s clear that action is needed.

Consumer demand for Finfluencer verification

When asked what would improve confidence in the investment content shared by social media influencers, better understanding of risk was key. Of those who use social media for investment content, 50 per cent would like more information on the potential risks involved, while 45 per cent would like more transparency on any investment mistakes finfluencers have made in the past and how they navigated them.

Significantly, 73 per cent want social media platforms to introduce a verification system for influencers promoting financial content, to help them identify genuine accounts and their financial credentials.

Barclays calls for changes to regulation

This need for increased support for investors, and better protection against unsuitable or unregulated advice, is broader than just social media. It’s an industry wide issue and points to the importance of the FCA’s ongoing advice/ guidance boundary review.

Barclays believes the investment industry needs to work with Government and regulators to improve consumer support for investors. The Bank recently set-out five public policy changes to help close the UK’s investment gap and empower more savers to engage with investing. These include changes to regulation that allow banks and financial providers to suggest investment recommendations to customers on a “people like you basis”, and the creation of an FCA-accredited badge to help entry-level investors identify suitable products.

Sasha Wiggins, CEO at Barclays Private Bank and Wealth Management, said: “The UK landscape needs to change to support and encourage savers to invest for their future. As more people turn to social media for investment guidance, there is clear demand for platforms to improve transparency around finfluencers’ credentials. This is needed to tackle the threat of investment scams and stop people acting on unsuitable guidance. 

“The increase in finfluencers demonstrates that consumers value examples of how people in similar situations are investing their money. We believe that the investment industry needs to work with the Government and regulators to enable firms, such as banks, to provide better, more personalised support to would-be investors. This will create an environment that protects and empowers investors by giving them information from trusted sources, helping them to invest with confidence.”

Clare Francis, Director of Savings and Investments at Barclays Smart Investor, shares her top tips on what to look out for when browsing investment guidance on social media:

1. Do your own research before parting with any money: Always sense check any investment information shared on social media to make sure that the source can be trusted. For example, click on their bio to see if the finfluencer has a background in finance or experience in the investment field. If you struggle to reassure yourself that they know what they are talking about, be cautious about acting on their guidance. 
2. Make sure it’s right for your circumstances and goals: Investment information on social media isn’t tailored to your personal circumstances, even if you typically resonate with the influencer in question. Have a look at whether the investments they’re talking about are sold on any regulated investment platforms – steer clear if they’re not and even if they are, do some additional research to make sure you’re comfortable that it’s appropriate for your needs.        
3. Stay scam smart: Scammers often target investors on social media so it’s really important to make sure any investment opportunity is genuine. Look for online reviews and use the FCA’s ScamSmart Investment Checker to make sure the firm promoting the investment isn’t on their warning list. You can also check the Financial Services Register to make sure that they are authorised by the FCA and find registered details you can use to contact them in a legitimate way.  
   

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Notes to Editors

¹ Unless otherwise stated, quantitative consumer research was conducted with a UK representative sample of 2,011 respondents by Savanta in July 2024.

² Fraud and scam consumer research was conducted by Censuswide in August 2024, with a UK representative sample of 1,007 respondents aged 18-24.

³ Barclays business and personal current account scam data for investment scam claims, January-August 2024.

Barclays Smart Investor

Barclays offers a digital investing service, Barclays Smart Investor, which provides the tools, helpful insights and research resources to help customers take control and make their own investment decisions. It is open to investors of all levels of experience who can start investing from as little as £50.

Barclays Public Policy Report & Recommendations

• In September 2024 Barclays Group Policy Development team launched a public policy report “Empowering retail savers to engage with investing”, setting out five public policy changes needed to get more UK savers investing for their future. This included a recommendation for regulatory change to enable firms to suggest investment actions to customers with large cash balances, based on “people like you” personas.
• Barclays’ Group Policy Development team creates public policy thought leadership content on behalf of Barclays. The work draws on the bank’s expertise, data and insights, and is intended to inform the design and application of public policy solutions in response to pressing economic and societal challenges.

For more information, contact India McMillan at india.smyth@barclays.com or Annie McQuoid at annie.mcquoid@barclays.com.

About Barclays

Our vision is to be the UK-centred leader in global finance.  We are a diversified bank with comprehensive UK consumer, corporate and wealth and private banking franchises, a leading investment bank and a strong, specialist US consumer bank.  Through these five divisions, we are working together for a better financial future for our customers, clients and communities.

For further information about Barclays, please visit our website home.barclays