Why finfluencers especially resonate with women and minorities

In 2014, eighth-grade teacher Athena Valentine Lent realized with a jolt that none of her students knew it was possible to buy food without food stamps. “I thought, wow, there’s a market here” for basic financial guidance for working Latino families, she recalls.

She scouted the blogosphere for Latinos who delivered commonsense personal finance advice and found not even a handful. And Latino certified financial planners appeared to be completely absent.

Therein lay Lent’s opportunity. Now her full-time job is running her personal finance platform, MoneysmartLatina, and writing for online magazine Slate. She often quotes credentialed advisers, and is even thinking thinking about earning her own credentials ... but why would she, when her core followers are unlikely to become prime targets for wealth managers?

“A lot of CFPs don’t talk to women of color. For a lot of us, there is a wealth gap and there is a wage gap,” Lent said. “We don’t have the kind of money that financial advisers want, especially if they are commission-based.”

The credentialed aren’t accessible for many women and ethnic minorities, so finfluencers turned the gap into their platforms. "Finfluencers” are self-appointed personal finance commentators who try to build digital content empires without the benefit of the credentials, licenses or regulatory oversight designed to protect consumers from doubtful advice.

It’s not that women and ethnic minorities disregard credentials, said Lorna Sabbia, who runs Bank of America’s retirement business. It’s that they gravitate to personalities who understand and respect their nuances of culture, earning, saving and even the very definition of financial success.

“Women make good investors. They like to do their due diligence.,” she said. “Women learn better when they’re surrounded by other women. It doesn’t have to do with expertise or pedigree. There’s a comfort level of learning with other women.”

An in-depth Bank of America study released last Wednesday found that younger women are somewhat more comfortable talking about money than baby boomer women, with 65% open to discussing new investment opportunities, compared to 44% of the older generation. But though 35% of the survey respondents said that a “go-to trustworthy source for advice” was appealing, and 44% view financial advisers as key resources, 55% had never spoken with an adviser. Even among women with incomes of $250,000 or more, just 61% had spoken with advisers.

People who perceive that they are overlooked by mainstream financial institutions, authorities and advisers tend to fall into two camps, said Cathy Vasilev, chief operating officer of Red Oak Compliance Solutions. Some consumers have deep-rooted skepticism of any authority figures while some younger consumers are enthralled by any type of information conveyed by their favorite media and channels, such as TikTok.

“They’ve had influencers in their lives before they thought about financial topics,” Vasilev said. “They don’t trust traditional media and then these influencers speak their language. There’s a connection.”

The industry’s patchwork response, with the Securities and Exchange Commission, state regulators and the Financial Industry Regulatory Authority Inc. all weighing in to some degree with guidance and, for transgressors, fines, hasn’t helped. While credentialed professionals typically err well on the side of caution with their social and digital media content, finfluencers are less likely to exercise such restraint, Vasilev said.

State regulators are starting to flex their authority, she added, potentially reining in finfluencers who don’t realize that a national platform translates to a footprint in every state.

Kimberlee A. Davis, managing director of The Bahnsen Group, is a lawyer and a certified divorce financial analyst who positions herself online (mainly on Instagram) as “The Fiscal Feminist.”

“If you’re a person who’s afraid of this topic and you see someone who talks in sound bites, and it’s entertaining, that’s a lot more palatable than someone who’s talking to you about standard deviations and beta,” Davis said. “What is bothersome to me is that these finfluencers try to make it palatable but there’s not much substance. I’m not sure what a 21-year-old can tell you about investing.”

People who aren't conversant with traditional financial institutions and credentials are more susceptible to dubious guidance about retiring early, getting rich quickly, and other schemes that they hope will vault them to financial stability, she said. Especially for those who feel that they can’t approach traditional institutions and advisers, the appeal of enthusiastic but marginally informed personalities could backfire.

“I worry that people will lose money and get even more cynical,” said Davis. “There’s a populist element that can get this going but you need a fundamental investment strategy for the long term.”

Davis and Lent both outlined strategies that blend the charisma of finfluencers with the trustworthiness of credentialed advisers: building compliant, welcoming workshops and peer groups that give women and minorities context for decision-making alongside accurate information.

In fact, Latinas already use that model, Lent said, with traditional savings circles, in which each member contributes $100 a week, and the weekly pot is awarded to each member in turn. Such circles are a way to save for an emergency fund and medium-term goals, and build accountability for managing household finances, Lent said — all outside the confines of traditional banks.