Investors are turning away from the investment advice peddled by celebrity and social media-based commentators and are increasingly turning to professional financial advisers, a survey claims.
The research found that celebrity and social media-based financial commentators are declining as a source of influence on investments, particularly among younger generations.
The survey, commissioned by US-based financial services firm Charles Schwab, found that almost nine in ten (87%) of 1,000 UK retail investors surveyed believe they lack sufficient financial knowledge to manage their portfolios.
Meanwhile, according to an article in the Financial Times, two exchange-traded funds (ETFs) which track the investment decisions of US politicians, have, over the last 12 months, outperformed the investment decisions of the general public
The ETFs launched last year by Subversive Capital Advisor track the investment holdings of Democrat (NANC) and Republicans (KRUZ) members of Congress.
The NANC ETF (named after the former Speaker of the House of Representatives Nancy Pelosi) outperformed the 29.9% return of the S&P500 index by 37.5% in the year to March.
Over the same period, the KRUZ ticker (named after Republican senator Ted Cruz) made a return of 25.4%, beating the 22.2% return of the Dow Jones Industrial Average.
The Schwab survey found that 81% of UK investors believe it is increasingly important to seek expert advice on their investment strategies with 58% consulting professional financial advisers (up 7% YOY) and 52% referring to the financial press (up 7% YOY) to make investment decisions.
Since the end of 2021, the influence of social media influencers who specialise in finance has dropped by 13% (from 50% to 37%) amongst Gen Z (those born from 1997 to 2012) and by 10% amongst millennials (from 52% to 42%).
A similar trend is visible with celebrities who discuss their investments; their influence decreased by 19% (from 51% to 32%) among millennials and by 10% (from 45% to 35%) amongst Gen Z in the same time period.
Richard Flynn, UK managing director at Charles Schwab, said: “Since we began this study at the end of 2021, domestic and international markets have experienced varying levels of volatility and uncertainty. It is therefore reassuring to see a rising number of investors proactively seeking professional advice in order to make the most of their investments.”
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