For Sun Life advisor guiding Gen Z clients, social media is a good place to start

Sun Life advisor warns against generic advice, and explains how TikTok plays into his practice

For Sun Life advisor guiding Gen Z clients, social media is a good place to start

As a significant percentage of emerging adult Canadians turn to the internet for information on investing, regulators are underscoring the potential for risky financial outcomes. But for one young financial advisor, there’s an upside to this digital dynamic.

“I'm in my 20s, so I see all these posts and videos that trend on TikTok, Instagram, and Facebook,” says Michael O’Brien, a financial advisor with Sun Life in Newfoundland and Labrador. “I don’t think those are necessarily a bad thing.”

In December, the British Columbia Securities Commission published the results of a national survey of Canadian investors. It found that nearly one fifth of Canadians use Facebook (23%) or YouTube (20%) as a source of information for investing.

In a companion study focused on emerging adults (EA), it found that Canadians under 35 years old are more likely to self-manage their investments, and EA investors that manage their own investments are more likely to use online sources of information.

“Before, investments and finance weren’t necessarily a highly spoken-about topic,” O’Brien says. “Now they’re getting attention through all these conversations online, and those different conversations find their way into my meetings with younger clients.”

Finfluencers are effective in generating buzz around finance and investments, but there are reasons for concern. Social media content has viral potential, any given piece of financial advice can spread fast and far to a wide range of individuals – even if it’s not appropriate for their situation.

“When it comes to social media, I don’t think there’s a true understanding of the risks of certain kinds of investments,” O’Brien says. “Social media sometimes only shows the positive outcomes of an investment, and how well people who bought into it have done. But it zooms into people’s highlights and not their downfalls, and I think that can be dangerous.”

A November study by the CFA Institute draws attention to the rising trend of social media influencers advertising financial products. With a large audience and potentially unlimited reach, they are able to spread misleading information by touting the benefits of certain investments. While they make investing more accessible, they’re not bound to put their followers’ interests first, and may receive undisclosed compensation for promoting risky financial products.

Regulators around the world are taking notice. Last year, the Australian Securities and Investments Commission warned of possible enforcement actions, including jail time, for influencers who feature or promote financial products with misleading or deceptive representations, or unlicensed advice or dealing. The Canadian Securities Administrators have also warned Canadians about the risks of social media as a source of investing and financial information.

“When I talk about financial planning to my clients, I like to use hockey or sports as an example,” O’Brien says. “A lot of times clients focus on the offense, whether it’s investing in NFTs, crypto, or rental properties. I explain how defensive pieces, like savings or critical illness insurance, can make more sense for them.”

According to the BCSC’s research, younger investors in Canada tend to have more speculative beliefs and goals. Among Canadians who pursued investments they learned about themselves, around four fifths (81%) said they saw an opportunity they didn’t want to miss out on, and just over three fourths (77%) said they did it for the fun of managing some investments themselves.

While DIY investors like to do their own research, many also seek a second opinion from advisors. The BCSC found about 1 in 4 DIY investors go to an advisor before making investing in an opportunity.

“Investing can be very emotional for clients, so I think it makes sense to work with a professional advisor who has your best interests at heart and can provide you with trusted advice,” O’Brien says. “I think you’re likely to limit your risks compared to doing it on your own.”

As a next-generation advisor, O’Brien believes he brings value to younger clients because of his ability to relate with their situation and thinking. He’s also able to get involved when older clients want to pass on their assets to their children or grandchildren, and want continuity in the wealth management service they receive.

Some other young advisors might use social media to engage clients, educate prospects, and maybe even try to balance out the information that comes from unlicensed influencers. For his part, O’Brien prefers to do things old-school with in-person client meetings.

“When we’re sitting face to face, I can read facial expressions or body language to see if they get what I’m saying, or if I need to slow down, if possible,” he says. “I find people get a really good feel for me, and we’re able to build trust and a solid relationship from there.”