Gen Z prefer TikTok and YouTube to financial advisors — but the advice they receive “can be wildly inappropriate,” financial psychologist tells CNBC | Vette Leader

If your French Riviera poolside friends’ latest Instagram posts are making you feel bad about your financial situation, you’re not alone. Almost half of Gen Z social media users (ages 18 to 25) say they’ve felt negative about their finances after seeing posts from others, according to a recent Bankrate survey.

Honestly, it’s kind of intentional; 46% of Gen Zers in the Bankrate survey admitted to posting things to appear more successful in the eyes of their followers. “And those numbers are probably higher,” says Sarah Foster, an analyst at Bankrate, noting that 62% of all survey respondents said the people they follow do the same.

For people you know in real life, it might be easy to see where their social media profiles deviate from reality. But when it comes to influencers, that line can be a lot harder to spot. In addition, many of them provide financial advice. According to a survey by marketing firm Vericast, Gen Z investors say they are more likely to get financial advice from TikTok (34%) and YouTube (33%) than from a financial advisor (24%).

If you follow the money advice you find on social media to keep up with the virtual Joneses, you could be in big trouble, says Brad Klontz, a board-certified financial planner and professor of financial psychology at Creighton University. “Young people listen to financial advice that can be wildly inappropriate,” he says.

Here’s why experts say you’re likely to believe the advice you see on social media, and why you should be wise not to trust it.

Why You Believe Influencers: “This Is How Our Brains Are Wired”

Everyone knows to some degree that what you see online about other people’s lives is not the reality. “I like to think of social media as a scrapbook filled with the best parts of people’s lives,” says Foster. “It can make you compare yourself to an unrealistic representation of someone else’s life.”

When someone you admire talks to you directly through the camera, “something really weird happens,” says Klontz: a phenomenon known as “parasocial interaction.”

“When I look you in the eye and hear you talk and you look me in the eye, there is a deep connection and a deep trust,” he says. “That’s the way our brains are wired. For 99.9% of human history, having that look has been intimate. Your brain doesn’t know it’s unidirectional. It creates a false relationship.”

Combine that sense of confidence with a sense of inadequacy about money, and you can create a situation where people are willing to let go of some of their skepticism about advice they see online, says Foster.

“You saw that during the meme stock phenomenon, where people got huge returns,” she says. “People may not have stopped thinking critically about what they saw on social media.”

You can’t always trust what you see on social media

Be critical of any advice you find online, experts say. For one thing, someone who presents themselves as successful or knowledgeable in finance may not be giving you the full story, says Foster.

“You may have seen everyone vacationing this summer, but you don’t know if anyone went deeper into debt to pay for it,” she says. “Realizing that you don’t know the whole story is really important.”

Financial advice is rarely one size fits all, which is why you won’t find many financial advisors sharing tips on social media, Klontz says. “Hardly anyone who gets in here is a real pro because they’re too scared,” he says. “You see posts telling you which stocks to buy, but there are reasons a pro wouldn’t. If I give that advice, maybe I’ll change my mind tomorrow, and where are you then? I don’t even know if you should buy shares at all.”

When you see fascinating financial advice on social media, ask yourself if this strategy fits your financial plan. For example, if someone is flogging stocks or crypto trades aimed at making quick profits, it may not align with your plans to invest in long-term goals like retirement.

If an idea still sounds like it might align with your goals, start investigating further, says Klontz.

“Check out this person giving the advice. What is their background? What are their credentials?” he says. “Then have multiple people execute the strategy or technique, including a recognized expert and someone who doesn’t make money selling that technique.”

Be especially careful if someone is hoping to sell you something by showing off their car collection or showing you shops on board a yacht. “It’s an old selling technique. These guys get rich, but not from day trading. They sell you a course,” says Klontz. “Studies show actual multi-millionaires downplay their wealth.”

“People who flaunt lavish wealth are trying to manipulate you,” he adds. “Plain and simple.”

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