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By Barbara O’Neill, Ph.D., CFP®, AFC®, [email protected]

Personal Financial Managers (PFMs) are a frequent source of information about investing for service members. So is TikTok. I recently attended a class called TikTok and Investing. Below are ten key takeaways:

  1. User Demographics- TikTok is primarily a Gen Z platform for making and sharing short videos from 15 to 60 seconds up to 3 minutes in length. An estimated 80 million Americans actively use TikTok. Over half (60%) are aged 16 to 24, 80% are aged 16 to 34, and 86% are aged 16 to 44. Sixty percent of TikTok users are female.
  2. TikTok History– TikTok launched in 2016 and became popular in 2018. It was the most popular app downloaded globally in 2020 and has over 1 billion monthly active users (versus 2.9 billion for Facebook and 2.2 billion for YouTube). TikTok’s algorithm prioritizes content about popular trends.
  3. TikTok Creativity– Video creators can type text over videos to enhance visual content. Another popular feature is recorded music that users lip-synch and/or dance to. Some TikTok videos have drawn concern such as those where users create a “finger gun” and appear to aim it at something.
  4. Investing Information– According to industry research, more than half (56%) of Gen Y (born 1981 to 1996 and age 25-40 in 2021) and Gen Z (born 1997 to 2012 and age 9-24) seek out financial advice on social media and Gen Z uses primarily Instagram (57%) and TikTok (52%).
  5. Influencers’ Influence- TikTok users trust influencers and 75% follow specific individuals and take their advice. One study found that 37% of those who follow influencers take the information at face value versus checking it out. Only 1 in 10 TikTok financial influencers have any formal qualifications.
  6. Influencer Moonlighting- Influencers don’t earn much from posting TikTok content and need a large number of followers to earn an adequate income. Where many earn money related to products and services such as online courses. TikTok viewers often receive pitches for influencers’ side hustles.
  7. Errors and Endorsements- An estimated 1 in 7 videos from TikTok financial influencers is incorrect or misleading. Almost two-thirds (64%) recommend specific companies to invest in and 11% recommend investments without any type of disclaimer.
  8. Positive News– Some high-quality educational TikTok videos are available from content creators who explain financial concepts in relatable, often humorous, ways (e.g., cute graphics and analogies). Example: behavioral finance professor Dr. Brad Klontz (37,000 followers). Search “TikTok videos for financial education” for more.
  9. High-Interest Topics- Younger generations say they are most confused about investing, taxes, and credit scores and actively seek out information on these topics. Like Twitter, hashtags like #investing are used to find content. Another popular hashtag is #stocktok for videos about trading stocks.
  10. “Red Flag” Questions- Answer these questions before acting on information in a TikTok video: Does the content creator have any credentials? Is the creator trying to sell something? Is the content “too good to be true”? and can you verify the information in the video?