Plenty of people love reality shows. What makes them so compelling is how messy they are – and the idea that these are ‘real people’, or at least unscripted scenarios. Audiences put themselves in the same scenarios while watching and have their “Well, what I would do if...” moment.
One could assume that watching some of these reality stars deal poorly with their challenges would put a damper on their reputation for making good, sound decisions. Apparently not: Reality stars from The Only Way Is Essex, Geordie Shore and Love Island are in both headlines and hot water after ‘being paid to promote risky investments on Instagram.’[i]
Reality stars can be savvy about making money, if they manage to leverage deals or have a savvy manager a la the infamously wheeling and dealing Kris Jenner. They are not financial advisers, nor qualified in any way to make financial recommendations to their audience.
This crew in particular were offering advice on high-risk, and completely unauthorised, trading schemes. The offence is punishable by a fine and up to two years in jail in the UK. Nine in total have been charged and there’s a chance more will follow in relation to similar schemes as the UK’s Financial Conduct Authority cracks down on ‘finfluencers’.[ii]
The rise of influencer culture and the increasing ad-ification of Meta platforms means we’re being delivered less-than-genuine advertisements constantly, slipped in between posts about things we’re actually interested in. Many of them come in the form of people we ‘know’ (influencers, be they sports stars, reality TV legacies, or new-fashioned TikTok darlings) essentially holding up a product and using our trust in them to sell it.
According to a 2024 influencer report, 49% of all consumers across generations make purchases because of influencer posts. It’s getting worse too; 30% of the same cohort are likely to trust influencers more as time goes on. And if there’s a discount code in the works? Well, 55% are more likely to actively seek out influencer content to get it.[iii]
Influencing is not a new concept even if it was probably called somethinge else in past. There is always some dodgy operator trying to push their wares, whether using famous faces or community-specific voices. For example, doctors were once paid to endorse cigarettes... Another very poor idea in the long run, much like trusting reality TV stars to guide your financial decisions.
How to tell the fakes from financial advice
The best way to get good financial advice, is to go to a trusted financial adviser.
Failing that, here are some red flags to avoid:
1. The ‘enviable’ lifestyle
Much like the confrontations some of us love to watch on reality TV, the lifestyle these finfluencers are supposedly living is usually staged. If you are seeing a lot of things out of your usual means – cars, planes, luxury trips – chances are they’re not within the means of whoever is showing them off either. It’s a bit of flash to make you associate the offering with financial success.
2. Exclusive or limited offerings
Just for the first 50 people, just for you, just until midnight tonight... Anything with a time or scarcity imposed on it is a hook. This is a classic sales tactic that depends on people’s fear of missing out, driving them into immediate action before they can think better of it.
If you do see something online you’re tempted to put your hard earned money into – don’t do it impulsively. Get a second opinion from a trusted fiduciary, or at least cool your heels a while and do some research on what is usually a high risk ‘investment’. Once the intitial fear and excitement fades, you’ll likely start to see some tarnish on the edges that shiny offering.
3. ‘Guaranteed’ returns
If you see anything about guaranteed high returns with some fabulous number attached, run. This is one situation where you certainly want to look a gift horse in the mouth. Forecasts based on your investment strategy are one thing; dangling a ‘sure thing’ for anyone who stumbled across the content is entirely different.
In the same way people can imagine themselves in reality TV situations, it can be all to easy to imagine yourself living the high life thanks to a tip from someone online. Unfortunately, there is no shortcut to financial success (short of winning Lotto). If you are wanting a second opinion on your investment portfolio, or guidance on your financial plan, it may be time to sit down for a face-to-face chat with your local fiduciary.
I can confidently tell you they will be more interested in helping you get your financial house in order than someone from Love Island.
by Nick Stewart (CEO and Financial Adviser at Stewart Group)
· Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 357.
· The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
[i] https://www.thisismoney.co.uk/money/markets/article-13425689/amp/City-watchdog-charges-Lauren-Goodger-TOWIE-Love-Island-stars-promoting-risky-investments.html
[ii] https://www.reuters.com/world/uk/uk-charges-nine-crackdown-finfluencers-2024-05-16/
[iii] https://au.finance.yahoo.com/news/research-reveals-influencers-significantly-drive-130300999.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA8Idbi56_rpz1JRTfAS6sqWaz0I61FwI2PZYRfgwepvo_MaBivGa2jA-S7lJVKePJJNJ6a8iotWbBDdFvO1hkar3NukyPRkK4adWBqMew2JPifXarFKpEbmEtgoK6glfQnxX-PUUaiJ_Wdwj8VzkpL83GNXk2YlS_cKOoOaWlFF
