Financial Influencers

By: Daniel Manger

One of the main trends we see today is a spike or at least an attempt to spike the financial literacy of our youth, as we see more and more people each day wasting away their fortunes or mismanaging their money in some form or another. Though this trend is not new, as we have seen even professional athletes throughout history go broke quickly after the end of their careers, we are finally seeing an effort made to correct these blunders by educating our youth. However, this education is not being done in a traditional sense in the classroom or from our parents, but rather being done through an incredibly powerful force and trend in our society today; social media and the creators behind its limitless content.

Social media is a staple of this younger generation and can be tied into almost any cultural phenomenon, with the most recent being a generation of financially savvy and courageous individuals. Now, this was first sparked with the covid-19 pandemic forcing people to stay inside and eventually getting restless staring at the same wall every day. This gave a great opportunity to people like Kevin Paffrath, a youtube streamer who talks about the current market, corporate news, and even investment advice. In past generations, people may have educated themselves on finances through books or classes, but now they are turning to streamers and content creators who have no certifications whatsoever. To give you a sense of how popular these ‘teachers’ have become, Kevin Paffrath or ‘MeetKevin’ has 1.7 million subscribers who will tune into his finance live streams almost every day. Other streamers like Marko Zlatic, Tori Dunlap, and Cameron Newell have 670,000, 1.7 million, and 50,000 followers respectively.

There are some commonalities between all of these content creators that have allowed them to garner such followings, even without typical certifications or field experience. The first of these requirements is to be relatable. These social media influencers tap into a channel that the younger generation is much more receptive to. Young individuals now will not watch financial news on television or other traditional media platforms simply due to a lack of trust or a lack of interest. Secondly, these influencers must ‘sell the dream’ or engage the viewers with something that is more interesting than traditional forms of media. This usually comes with the promise of financial freedom, the fancy cars, houses, and lifestyle that teenagers used to think would only be held by the biggest of Wall Street’s CEOs. Though this is typically a commonality of these influencers, it can also be one of the darker sides of this movement, as many times viewers are not shown the ‘red days’ or failures that many of these self-made traders and teachers go through. Only the lavish lifestyles and flashy sides of the craft are shown, which certainly keeps this younger generation engaged. The third and final requirement is that many of these creators give a false sense that the market is in a permanent bull state. Most of the viewers have been alive during a time period where the market has only seen a steady upward trend, leading them to not truly understand the indisputable fact that “true wealth comes from long-run interest.” This upward trend leads viewers to be attached to the get-rich quick schemes, simple tricks, and incredibly volatile stock moves, like what we saw out of AMC and GameStop this year, which we all know can end up coming back to bite you in the wrong situation.

What is unknown to many of these viewers is that these streamers no longer make their fortunes by following the content and tips that they are preaching, but rather from the ad revenues and sponsorships that they begin to get after their youtube and streaming careers take off. Though many of these content creators act in good faith, their advice does not really have much effect on their 2 million dollars in ad revenue over the year, while their viewers might be seriously hurt by a bad stock pick.

It is certainly significant to see a generation that is more interested in money and becoming financially literate, however, this must be taken with a grain of salt. It is vital that this generation becomes educated in a correct manner and for the correct reasons and not simply because they think they can find the next GameStop short and end up driving a Lamborghini for the rest of their lives. There are many reasons that have led up to this movement that does not just involve the pandemic. The rise of commission-free trading and applications like Robinhood that make investing so incredibly easy has created a slippery slope for this generation of young investors and traders. The real question is whether this slope will prove to be deadly or beneficial in the long run.

Whelan, R. (2021, August 27). The Social-Media Stars Who Move Markets. The Wall Street Journal. Retrieved October 24, 2021, from https://www.wsj.com/articles/the-social-media-stars-who-move-markets-11630056601.