Nathan Kennedy adjusts his home studio where he creates content on finance for his social media channels, in Hamilton, Ont., on March 17.Christopher Katsarov/The Globe and Mail
Delivering both entertainment and useful money tips in a 60-second video clip is a tall order. But that’s exactly what TikTok phenom Nathan Kennedy does for a living.
The Hamilton-based 25-year-old former PepsiCo district sales leader has nearly 411,000 followers on TikTok and a 32,700-strong audience on Instagram. And he’s not peddling cryptocurrency schemes or boasting about quick stock market wins to drive clicks and likes.
Instead, visitors to Mr. Kennedy’s feeds will find sketches about topics such as salary negotiation, index investing, and even a few clips about something as bland as Canada’s tax system. In one video, Mr. Kennedy debunks the common misconception that earning $49,000 a year is better than earning $50,000. But he uses the popular TikTok format of having a conversation with himself. A red-shirted Mr. Kennedy explained to a grey-shirted Mr. Kennedy that the first $49,020 of income is taxed at the federal rate of 15 per cent. It’s only every dollar above that threshold – up to $98,040 – that is taxed at 20.5 per cent (using 2021 tax rates).
@newmoneynate The last bracket baby #fintok #canada #financialliteracy #taxes ♬ Follow tsatkow92 - tsatkow92
While the video doesn’t capture every nuance of how Canada’s federal tax brackets work, it’s an example of how social-media content can make the basics of financial literacy not only accessible but also fun to watch. Bloggers and YouTubers have been creating down-to-earth and friendly financial content since well before the pandemic. But financial advice on platforms like TikTok and Instagram exploded when COVID-19 restrictions and a 21-month stock market rally drew scores of home-bound millennial and Gen Z novices to financial markets and to seek out online money-management information.
Of course, plenty of financial advice on social media is factually wrong or outright fraudulent. But some successful financial influencers, or finfluencers, see themselves as educators who can speak to individuals and life challenges often neglected by traditional sources.
“The whole goal is to get as many people to think that finance is cool as possible,” said Haley Sacks, a New York-based self-styled “financial popstar” known as @MrsDowJones. To do that, finfluencers are breaking new ground in terms of how financial information can be packaged.
For example, Ms. Sacks, who has more than 243,000 followers on Instagram and over 184,000 of them on TikTok, has a video in which she dispenses brief financial tips while also dabbing foundation on her face and applying eyeshadow.
@mrsdowjones Follow me on IG for more money secrets! #financetok #moneytok #rich #secrets #billionaire #invest #fyp #payyourselffirst #financialgoals #saving ♬ original sound - Haley Sacks
The strategy, she said, was to capitalize on the viral TikTok trend of brief makeup tutorials. She wanted to reach people who would not naturally gravitate toward financial content but might become interested if it was presented in a relatable format.
Finfluencers also address issues ignored by the wider industry. Mental health and LGBTQ identity are major themes for Ellyce Fulmore, 27, who counts 497,000 followers on TikTok and 13,400 followers on Instagram. The Calgarian, who had $35,000 in student loans and high-interest debt before the pandemic, said her ADHD makes it difficult to budget with a spreadsheet and easy to spend impulsively. To help herself stay on track financially, she now manages her cash flow by channelling funds to different accounts for long-term and short-term savings and using a reloadable prepaid Visa card.
Although Ms. Fulmore acknowledges not everyone experiences ADHD in the same way, her audience has been “very receptive” to content where she shares what financial strategies have worked for her, she said.
Being in a romantic relationship with another woman has also affected Ms. Fulmore financially.
“When me and my girlfriend were looking for a place to rent we had a lot of difficulties finding a place,” she recalled. Prospective landlords seemed uncomfortable around them and insisted on referring to Ms. Fulmore and her partner as “friends,” even though they’d made it clear they were a couple.
It was an attitude Ms. Fulmore said she had never experienced when she was renting and dating men before recognizing her queer identity. Eventually, Ms. Fulmore and her current partner had to bump up their rent budget to find a place where they could live together.
“We thought maybe people will take us more seriously if we’re renting a more expensive place,” she said.
Ms. Fulmore is now writing a book on how personal experiences of discrimination affect personal finance.
Social media also addresses working-class financial questions that advisers may not often hear from a clientele of wealthier professionals.
Still, finding your way to worthwhile financial content on social media is a challenge in a space that remains rife with dangerously bad advice and scams.
Videos that promote risky options trading to inexperienced investors or where influencers boast about holding large sums in cryptocurrencies, which are much more volatile than stocks, are common. So are so-called pump and dump schemes, where scammers buy an asset cheaply and promote it on social media to drive up its price only to suddenly dump it and cash in on the profits.
A lack of regulation around financial information on social media means there’s little recourse for victims of fraud or protection for newbie investors, said Preet Banerjee, a Toronto-based personal finance commentator who chairs the Canadian Foundation for the Advancement of Investor Rights, known as FAIR Canada. (He did not talk to The Globe and Mail as a spokesperson for the organization.)
“We know that people tend to gravitate to opinions that already confirm what they might believe and we don’t know what their level of financial literacy is,” said Mr. Banerjee, who has his own YouTube channel with more than 100,000 subscribers. “They may find themselves having more conviction with some strategy that may not be appropriate.”
Listen to this Stress Test episode on investing in cryptocurrencies
So how can neophytes filter out the mass of bad-to-downright-ugly financial content and find the best of what finfluencers have to offer?
To start, keep in mind that the largest social-media accounts aren’t necessarily the most credible, said Ben Felix, an Ottawa-based portfolio manager at PWL Capital.
While Mr. Felix’s own popular YouTube channel, called Common Sense Investing, counts 248,000 subscribers, success on social media often involves peddling improbable get-rich-quick schemes, he noted.
“There are personal finance YouTube channels, not to mention TikTok, that have way more subscribers than I do, but they give terrible advice,” he said.
Another red flag: Videos that prompt you to buy a particular stock or crypto token, Mr. Felix said.
“You don’t know what’s going on behind the scenes,” he said in terms of any compensation or incentives that influencers may have been offered to promote the asset to their followers.
There are also more nuanced conflict-of-interest issues around corporate sponsorships. Lucrative brand-ambassador contracts are a major source of revenue for those in the social-media business.
While many such pair-ups are done in full transparency and involve sound financial products, they still highlight the fact that many social-media gurus aren’t fully independent financial commentators.
All influencers interviewed by The Globe said they’re very selective about which brands they endorse, adding that they turn down the vast majority of corporate pitches and limit themselves to products they already use and like or have extensively researched.
Ms. Sacks, who also offers financial literacy courses, said her online direct-to-consumer platform, Finance Is Cool, is now her major source of business.
“That gives me the power to say no” to brand endorsements, she said.
Finfluencers who take a long view have an incentive to maintain their audience’s trust, Mr. Banerjee said. But even with the best intentions, they may not always fully understand the financial products they decide to get behind, he added.
Ultimately, Mr. Banerjee would like to see some light regulatory oversight introduced for finfluencer content. The rules would have to offer some safeguards for consumers without being so restrictive that they end up shutting down the financial conversation online, he added.
In general, fact-checking every bit of financial information you gather from social media is a good idea, Mr. Kennedy said.
“You have to do more than just be on TikTok,” he said. “You have to do your own due diligence.”
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.