Paxful has analyzed 1,212 TikTok videos of 50 popular #StockTok influencers providing financial advice to millions of users to discover how much misleading information is being circulated.
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The analysis revealed that 14% of the included videos were identified as encouraging users to make certain financial decisions without carrying a disclaimer. Any videos that persuaded users to buy specific assets, implied an investment would guarantee a profit, or urged users to invest a particular amount of their income were flagged as being ‘misleading’.
How Much Of The Financial Content On TikTok Is Misleading And How Wide Does It Reach?
- 14% of the TikTok videos analyzed were identified as encouraging users to make certain financial decisions without carrying a disclaimer*. For instance, this influencer encourages his followers to invest stocks in various companies without carrying a disclaimer in his profile or videos.
- The misleading content identified has totaled 4 million views and 3.6 million likes.
- More than half of the influencer accounts analyzed (52%) had posted at least one misleading video out of the 25 videos that were analyzed per influencer.
- The accounts with misleading content collectively have 46 million followers.
- 60% of the TikTok finance influencers analyzed didn’t have a disclaimer in their bios and only 13% of the videos analyzed featured a disclaimer.
- Only 1 in 10 of the influencers analyzed were transparent about their qualifications (or lack of thereof) in their bios or personal websites. It’s important for anyone offering financial advice to be transparent about their background and qualifications.
*A disclaimer either on the video or in the TikTok influencer’s bio would inform viewers that the content is opinion not advice, or to do their own research, or to seek further professional advice, or that past market performance is not an indicator of future returns.
TikTok is filled with videos on financial advice and investment tips with the #finance tag alone counting 1.3 billion views. This type of content can easily be accessed by young and inexperienced users – Hootsuite estimates that 69% of TikTok users are aged between 13 to 24. According to this Bloomberg article, influencers are optimizing their videos for entertainment in order to gain likes and followers rather than concentrating on fact checking. This can mislead young or inexperienced viewers. Yet, unless a video has already been reported and removed by TikTok, ones that contain potentially misleading information can be easily accessed from hashtags, regardless of whether a user is following a particular account or not.
What Are These Videos Encouraging Viewers To Invest In?
- The most common category of misleading video in our analysis recommended that users invest in something without a disclaimer present. These videos collectively totaled 16,765,837 views and 2,239,684 likes – equivalent to 11% of the videos we analyzed.
- 64% of these suggested investing in a particular company, as suggested in this video.
- 8% suggested investing in exchange-traded funds (ETFs) and indexes.
- 5% suggested the viewer put their money into real estate and other lesser-known assets – as seen in this video.
- The most popular category of misleading content among TikTok users were videos that claimed the user would make money or profit from the influencer's advice. These videos collectively totaled 20,715,692 views and 2,729,920 likes – equivalent to 4% of video analyzed.
- 1% of the misleading videos, which accumulated 1,418,585 views and 143,897 likes, recommended investing a specific amount of income or savings to make money without a disclaimer present.
Q&A With Dr. Brad Klontz, Financial Planner and Financial Psychologist
A Q&A with Dr. Brad Klontz, Financial Planner and Financial Psychologist at Creighton University’s Heider College of Business
Q: In general, there’s a lot of informative content on TikTok for people who want to learn more about managing their finances or getting into investing. To what extent can TikTok provide this type of useful advice? When should a user do their own research or seek professional financial advice?
A: TikTok is the fastest-growing social media platform. Like it or not, people are getting information on personal finance and investing there, just like they do on other social media platforms. My opinion is that these platforms can be helpful for education but the content should never be used as advice. There's no one approach to investing that is best for everyone and so general advice is rarely appropriate.
There's also a tremendous amount of misinformation and terrible advice out there. While TikTok can be a great place to educate and increase awareness, it's not appropriate to dispense financial advice there and most people doing so are not financial professionals. On the plus side, TikTok has demonstrated a commitment to encouraging the development of educational content with its $50 million Creative Learning Fund.
Q: What steps or precautions would you recommend a user on TikTok take to make sure they aren’t being misled by the content they are viewing?
A: It is important to research the qualifications of the person producing the content. TikTok can be a great source of information and ideas, but it is critical to do your own research to see if these ideas apply to you or are in your best interest. With regard to financial advice, it is very important to seek out advice that is specific to your unique situation and needs.
Q: What are the red flags you would personally look out for when it comes to TikTok content on investing and personal finances?
A: Avoid creators who are making specific investment or financial recommendations, such as which stocks or insurance products to buy.
Q: Hashtags such as #finance and #investing have hundreds of millions of views on TikTok now. What would you say are some reasons for this type of content being so popular on the platform?
A: The recent bull market and market volatility have led to increased interest in learning about investing as well as people who are using social media to sell get-rich-quick type courses to uneducated beginners.
Methodology
- Paxful (a peer-to-peer finance platform) analyzed 1,212 TikTok videos from a sample of 50 popular finance-focussed TikTok accounts with a minimum of 11,000 followers each. These were sourced by searching on TikTok via hashtags such as #investing, #stocktips, and #stocktok.
- Researchers manually watched a sample of 25 consecutive videos related to finance on each account, starting with the video that appeared on the public hashtag page. They analyzed whether each video contained misinformation according to our definition of a misleading video:
- It carried no disclaimer on the video or video description or in the account bio and matched at least one of the following criteria: the content encourages the viewer to invest in particular assets; the content implies that a particular investment will guarantee the viewer an increase in wealth or return on investment; the content encourages the viewer to invest a particular proportion or amount of their income.
- Data and calculations are correct as of 1st December 2020.
