Social media ‘finfluencers’ who provide sometimes suspect advice online are losing influence as retail investors increasingly turn to professional financial advisers, according to a survey.

Investment platform Charles Schwab says its survey found that celebrity and social media-based finance specialists were declining as a source of influence on investments, particularly among younger generations.

The last 10 years has seen a grown in financial influencers and celebrities often pushing crypto currency investments, get rich schemes and allegedly easy ways to make money through investments but the tide may be turning, says Charles Schwab.

According to the survey, since the end of 2021 the influence of social media influencers who specialise in finance has dropped by 13% (from 50% to 37%) among Gen Z and by 10% among Millennials (from 52% to 42%).

A similar trend has been seen with celebrities who discuss their investments. Their influence has decreased by 19% (from 51% to 32%) among Millennials, and by 10% (from 45% to 35%) among Gen Z in the same time period.

The firm's survey of 1,000 UK retail investors found that nearly nine in ten (87%) UK retail investors believed they lacked “sufficient levels of financial knowledge” to better manage their portfolios.

Other key findings were:

• 81% of UK retail investors believe it is increasingly important to seek expert advice on their investment strategies

• 58% are consulting professional financial advisers (up 7% YOY) and 52% are referring to the financial press (up 7% YOY) to make investment decisions

• Younger generations, in particular, are turning away from social media influencers

The findings are in the latest Investment Forces research series from Charles Schwab UK.

The firm says that greater interest in professional advice has grown “in tandem” with retail investors taking an increasingly active approach to investing.

Despite macro-economic uncertainty, four in five (80%) UK retail investors believe it is important to manage their own investments directly in order to react to, and make the most of, fast market movements. However, almost nine in 10 (87%) investors believe they lack sufficient levels of financial knowledge to manage their portfolios effectively in the current environment.

The most significant shift has taken place among Gen X and Millennial investors, who have historically shown more appetite in taking investment advice from ‘finfluencers’, says Schwab.

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 – and notable – number of investors proactively seeking professional advice in order to make the most of their investments.”

• Survey responses were collected and analysed from 1,000 UK respondents in February 2024.