TikTok 'finfluencers' tout hot stock tips — but most lack financial credentials

"Buy this stock before it surges." (TikTok personal finance account)

"You can make $100,000 a month through a side hustle." (TikTok personal finance account)

So-called "finfluencers" — a portmanteau of finance and influencer — are rapidly gaining influence on social media platforms such as TikTok, where they dispense investment and wealth-management advice. But a majority hold no financial licenses or professional credentials, the Wall Street Journal reported Sunday.

The Wall Street Journal analyzed roughly 50 hours of content from 212 TikTok accounts that used finance-related hashtags such as #investing and #personalfinance and offered money-related advice. More than half of those accounts held no financial advisory license or certification.

Accounts focused on personal finance covered a wide range of topics — from long-term wealth management and investment account setup to passive income through side hustles, individual stock picks and short-term trading. Some account holders built subscriber trust or sold paid courses by flaunting large profits shown in their brokerage accounts or displaying luxury cars and lavish lifestyles.

Timothy James, 38, runs accounts on TikTok and Substack offering stock picks and market outlook content. [Social media]

Content featuring direct individual stock recommendations made up a significant share of the material. About one-third of the 212 accounts the Wall Street Journal analyzed recommended specific stocks or disclosed their own holdings. The recommendations ranged from stocks suitable for long-term holding to aggressive calls urging followers to "buy before it spikes."

Timothy James, 38, who runs accounts on TikTok and Substack offering stock picks and market outlooks, predicted short-term gains for PBF Energy and Sunoco last month. PBF Energy subsequently posted a double-digit percentage gain, and Sunoco rose more than 6 percent.

Not every call has been right, however. T1 Energy, a holding James disclosed publicly, fell 54 percent in his portfolio. He said the only guarantee he could offer viewers was that he would "pick a wrong stock at some point."

Some day traders present successful short-term trades or returns as evidence of their stock-picking ability. A Federal Reserve Bank of Philadelphia survey found that 41 percent of consumers who obtain financial advice through social media said they trust that content at a high level.

The concern is that this content is shaping how younger generations actually invest. Fidelity Investments credited finfluencers with driving a surge in Roth IRA account openings. Generation Z — those born between 1995 and 2007 — contributed 73 percent more to Roth IRAs in the second quarter of this year than in the same period last year. A Roth IRA is a tax-advantaged retirement savings account used in the United States.

According to the Financial Industry Regulatory Authority, people who obtain investment advice from social media rated their own investment knowledge higher than those who do not — yet scored lower on objective knowledge assessments. They were also more vulnerable to investment fraud.

Gary Mottola, FINRA's research director, said investors "should look at this information with a skeptical eye" and "ask whether it is credible and whether it is trustworthy."

21-year-old dispenses money and life advice, sells courses while flaunting a $100,000 Mercedes

British TikTok creator Leo Gibson produced a video listing 21 pieces of advice about money and life that he learned before turning 21 — recommending index fund investing and using credit cards only within one's means. [Social media]

Content in which young non-experts pass financial information to their peers is also spreading rapidly.

British TikTok creator Leo Gibson produced a video listing 21 pieces of advice about money and life that he learned before turning 21. The tips included recommending index fund investing and using credit cards only within one's means. The video has racked up close to 500,000 views.

Gibson largely draws on personal finance and investment books he has read, as well as finance-related YouTube videos, and repackages the content in his own style. "It feels much more relatable hearing it from a 21-year-old in a hoodie and a cap than from someone sitting in a big office in a suit saying the same thing," he said.

TikTok finfluencer Brittany Bowen, 29, posts investment and personal finance advice on her channel while flaunting luxury cars. The Mercedes she has shown off multiple times on TikTok is priced at more than $100,000. [Social media]

Some influencers promote their financial content by leading with a glamorous lifestyle — luxury cars and lavish daily routines — to win over consumers.

Another TikTok finfluencer, Brittany Bowen, 29, posts investment and personal finance advice on her channel while showing off expensive cars. The Mercedes she has displayed multiple times on TikTok is priced at more than $100,000. She does so to show customers the results they can achieve by following her methods.

Bowen primarily offers paid courses teaching content creation, social media monetization and investment strategies, while encouraging viewers to invest in AI and technology companies and build passive income streams.

Her paid course targeting women has attracted 625 participants to date. Priced at just under $300, it covers topics such as opening investment accounts and reading stock charts.

The Wall Street Journal noted that experts warn against treating the popularity of financial content or the wealth an influencer displays as proof of expertise, particularly as TikTok finance content — more accessible than traditional financial institutions — increasingly influences the real investment decisions of young investors.

yckim6452@heraldcorp.com