A new generation of investors is emerging on social media. Many of them turn to internet influencers for free advice instead of paying traditional investment managers. At the same time, most do not care about the qualifications of those who give advice. The main thing is a positive atmosphere and the opportunity to get the most profit.
In 2021, the total number of users of the top six online brokers reached 100 million.
Any user can try to earn some amount by entering the digital trading platform, and downloading mt5 terminal.
During the pandemic, millions of future financial analysts are fully immersed in the world of retail investment.
According to the financial statements of Robinhood Financial LLC, the number of its users has grown from 7.2 million (March 2020) to 18 million (March 2021). Robinhood is an investment app popular with young investors.
The proliferation of simple online trading has sparked a demand for inexpensive financial advice that can be obtained from the most easily accessible place, namely the Internet. A new generation of financial analysts has emerged on social media. Many of them have no education in finance and have never been involved in professional investment. Anyway, some world's leading brokers offer their clients who lack knowledge and experience in trading some learning courses and webinars. Exness is among these prominent "trading educators". The company is operating in more than 15 countries in different regions of the world. Asia is the biggest priority, but Exness South Africa is another big project of this international broker.
Today, Paffrath is known as MeetKevin, a YouTube influencer with 1.7 million subscribers. He broadcasts on the platform for several hours almost every day. Kevin talks about the stock market, handing out investment advice, and poking fun at commentators. In addition to live broadcasts, he also produces investment videos.
Paffrath says that he used to spend three or four hours with one client offering properties that could be bought below market value. In the best case, after 90 days, this person brought him $ 10 thousand. However, today, $ 10,000 is a bad result for Kevin.
He claims to have earned $ 5 million in the first three months of 2021, as views of his videos and demand for recommendations skyrocketed during the pandemic. The YouTube earnings receipts he provided to the Wall Street Journal confirmed that he does make several million dollars a year from ad sales alone.
Besides MeetKevin, there are other popular financial bloggers. For example, Marko Zlatik (Whiteboard Finance), who has 670 thousand subscribers. He gives advice on everything from buying a used car to building an investment portfolio based on the ideas of renowned financier Ray Dalio.
Another blogger, Jack Spencer (23) worked as a personal fitness trainer and filmed sports videos. In March 2020, he decided to change direction: now Spencer talks about how to choose stocks, and his youtube channel is followed by 94 thousand people.
Podcaster Tori Dunlap (27), known on TikTok as @ herfirst100k, explains how to build a profitable project and which debts are best to pay off first. She is watched by 1.7 million subscribers. Dunlap is also developing an app to develop a "community of impartial investors", and involve women in the world of finance.
Here are some rules for the influencers to create successful communication with the public.
Rule one: Building trust
Young people tend to be distrustful of financial institutions. In their opinion, they are ruled by an older generation that they do not understand. Therefore, this niche is filled by financial advisors from social networks.
Establishing trust is a critical element of YouTube's stock business. Rose Han (32) earned a degree in finance from New York University. Five years ago, she quit her job as a currency trader at HSBC and began posting videos about options trading, investing, and personal financial accounts on YouTube "Investing with Rose".
Han now has 500 thousand subscribers on YouTube and 54 thousand on Instagram. This year, YouTube ads and sales of her own online investing courses earned her $ 2 million, which she says is 10 times what she earned as a trader.
Rule Two: Demonstrate the success
According to experts, Gen Z (a group of people born in 1992-2002) pays more attention to cultural signs of wealth, such as expensive cars and fancy clothes, than to business education and financial certifications.
The content creators themselves argue that viewers only want to see the positive, and this puts pressure on them. Sometimes the images they show on social media are completely far from the truth.
Casey Adams (20) has conducted several hundred interviews with executives and investors for his YouTube channel. He was visited by such famous people as Netflix co-founder Mark Randolph, founder of the startup Winklevoss Capital Management and cryptocurrency investor Tyler Winklevoss and even May Musk, Elon Musk's mother.
Adams claims that advertising and his own media consulting company bring in about $ 300,000 a year. However, he admits that many billionaires and startup founders have agreed to come to the show just to talk directly to young individual investors.
Adams says that most of the audience is young people who are trying to understand the financial markets or choose a new investment strategy. He adds that he doesn't like to think of himself as an expert.
Rule three: only "bulls" and no "bears"
In the investment environment, bulls are those who buy securities with the expectation that their value will rise. Bears, in turn, are selling them in anticipation of a fall in prices.
Like most internet content, financial influencer videos are growing in popularity. And since the investment market becomes more expensive for a long period, only those who demonstrate success receive views. Many content creators report that bearish attitudes scare viewers away, and they themselves can be really trolled.
Paffrath claims to witness this phenomenon on a weekly basis. At the end of May, he broadcasted daily and talked about the theater chain AMC Entertainment Holdings Inc., whose stock price soared this spring due to speculation by young investors. AMC shares were highly volatile, but they climbed 10% on the close that day.
Paffrath warned against buying them as hedge funds were apparently buying short positions. He stated that the share price could collapse at any moment. But the viewers found it too negative. However, Paffrath didn't mean to be negative, just evaluating the situation realistically.
After the end of the broadcast, Paffrath lost thousands of people. According to him, most videos with positive titles gain more than 200 thousand views, while negative opinions about a company or industry usually do not exceed 60 thousand.
"Let's face it, real wealth comes from long-term investments. But the problem is that almost no one watches my videos on this topic on YouTube', Paffrath mentioned.