Study: More than half of the people in SG and HK rely on social media for financial advice

In today's digital age, society's reliance on social media for information has reached unprecedented levels. According to Meltwater's latest Global State of Social Media Report, over 70% of people now turn to platforms such as Facebook, Twitter, and Instagram for their daily news updates. This shift is not just limited to news consumption; social media has become a primary source for product reviews, health advice, and even educational content. Meltwater's data reveals that 65% of users trust social media influencers more than traditional advertisements. 

With that in mind, a new study by personal financial group MoneySmart found that 52% of adults in Hong Kong and Singapore rely on social media as their main source of financial advice. Trumping the likes of family and friends, financial advisors and personal finance books, platforms such as Youtube, Instagram and Facebook emerged as the most popular avenues for accessing financial insights. 

The study, which interviewed 2,000 adults from Singapore and Hong Kong over the age of 18, also revealed that 43% of those surveyed believe social media has improved their financial knowledge, with 19% using it daily to seek financial tips. 

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According to the study, Millennials are the generation most frequently turning to social media for financial advice, with 53% seeking information at least weekly. The most popular topics across all demographics include investing, saving and budgeting. Around 23% of those surveyed have changed their spending habits due to social media, with 30% starting a budget, 16% initiating an emergency fund and 11% increasing their retirement savings contributions.

The study also highlighted regional preferences and usage patterns in both regions. YouTube stands out as the most popular platform for financial advice in both markets.

Interestingly, the use of TikTok was prevalent amongst Singaporeans for short-form financial content, while Whatsapp and LIHKG forums resonated more with those in Hong Kong for community-driven discussions.

With the evident influence of social media, the study found 24% of those surveyed opened a savings account, while 18% have applied for a financial product such as a credit card or loan due to social media advice.

Investments, in particular, were heavily influenced by social media, with 37% of respondents making investments based on advice seen online, with popular choices including US stocks (45%), bonds (24%), and more. 

While social media proved to be a platform for broader access to financial information, the study revealed significant risks tied to unverified advice. Almost 1 in 5 respondents lost money on investments influenced by online advice, and a further 14% fell victim to financial scams after following social media recommendations. Among those who followed social media advice, 9% reported substantial financial losses.

Around 70% of respondents also encountered financial advice passively through their social media feeds, suggesting that they may be influenced by financial content even when they're not actively seeking it. In addition, 12% of respondents reported feeling more confused or overwhelmed by the sheer volume of financial information on social media,

To navigate financial advice on social media, Joe Yu, chief marketing officer at Futu Securities and Ethel Yow, APAC and ME social media and content manager at IG Markets suggested consumers should:

1. Be cautious of bold claims

Be wary of financial advice that promises guaranteed returns or "risk-free" investments, often framed as clickbait such as "100% win rate strategy" or "How to become a profitable trader." Sensational headlines are designed to attract attention, but credible sources will offer balanced insights about both potential returns and risks.

2. Verify the information 

Yow recommends cross-checking advice with reputable financial news outlets, official company reports, and licensed financial advisers, while Yu suggests a three-pronged approach: verify the source, consult multiple sources and assess the information's timeliness. Seeking professional advice and carefully evaluating risks are essential steps before making significant financial decisions.

3. Understand the risks

Social media offers real-time market sentiment and a variety of investment ideas, which can broaden perspectives. However, Yu warns that emotional triggers such as the "fear of missing out" (FOMO) can lead to impulsive decisions that often do not align with sound financial planning.

4. Balance short-term excitement with long-term goals

To avoid focusing solely on short-term returns, limit speculative investments to a small portion of your portfolio while balancing them with more stable assets such as index funds or bonds. Both experts recommend setting clear financial goals, creating a budget, diversifying investments and regularly reviewing your portfolio to maintain long-term financial stability.

5. Do your own research and use trusted platforms

Independent research is critical to understanding the risks, potential returns, and suitability of an investment. Yu emphasises the importance of choosing regulated brokerages for secure and transparent transactions. Trusted platforms offer reliable tools and resources that support informed investment decisions.

6. Stay alert to scams and avoid herd mentality 

Always verify the authenticity of information and social media links before acting. Avoid blindly following trends without assessing risks, as impulsive decisions can lead to significant losses.

"Our study reveals a significant shift in how consumers approach financial advice, with social media now taking the lead over traditional sources. While it's encouraging to see more individuals engaging with their finances, it's crucial to ensure the credibility and accuracy of the information they rely on," said Abel Lee, general manager at MoneySmart Singapore and Hong Kong. 

He added, "In a landscape where unverified advice is prevalent, our focus is to empower individuals with the tools, trusted guidance, and personalised recommendations they need to make informed decisions that lead to positive outcomes". 

In November last year, the Monetary Authority of Singapore (MAS) confirmed that financial influencers (Finfluencers) must be licensed and regulated under the Financial Advisers Act (FAA). 

Finfluencers are individuals who use social media to share tips and insights on finance related topics such as investing, saving and budgeting. 

Speaking in Parliament on 13 November, Alvin Tan, board member of the Monetary Authority of Singapore (MAS) and minister of state, ministry of trade and industry said that MAS expects financial institutions who employ finfluencers to advertise their products or services to ensure that the finfluencers present information in a clear and balanced format that highlights key features and risks.

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