Article by Phil
Twitter to take over financial planning advice
In a not unexpected development, Elon Musk has announced that his X social media platform (formerly and still well known as Twitter) intends to enter the financial services market and may even provide financial planning advice. (30/10/23 FT Adviser).
Musk says that he expects the platform to be in a position to deliver services as early as 2024. He has already applied for multiple state banking licenses in the US. But as yet there’s no news on whether he intends to target the UK. Many think he will because we have a nationwide banking regulator in the FCA which could make a lunch much easier.
The plan seems to be to offer a wide range of financial services through the platform. Including worldwide money transmission, loans, debit and credit card services plus financial planning advice.
With 18 million users in the UK, we could be a target market. Especially when you consider some of the numbers. Over 12 million people have an auto enrolment pension which has been set up without any access to advice and NEST (The National Employment Savings Trust) getting £500 million a month in deposits. Both of which could be easy targets.
It’s not just Twitter which has its eyes on financial services. Amazon launched its first insurance product service in the UK last year and Facebook is known to be looking at the market as well through its new Meta company.
It seems that nearly half of younger people think that they can find good financial advice on social media, and it’s reported that 20% are investing through or using Instagram.
Clearly this concerns the FCA who are continuing to investigate the role of so called online “influencers”. Especially when the number of financial advisors is expected to fall to as low as 5,000 by 2027. This will be a problem as 40% of people think they will need financial planning advice in the future according to AKG. Although 60% won’t with 21% saying they haven’t got enough money to need advice. 20% saying they couldn’t afford advice and 19% saying they didn’t need financial planning advice because they knew enough to do it themselves.
Should local financial advisers be worried. We don’t think so. There has been a growing need for more advice based financial services in the UK since the advent of the Retail Distribution Review back in 2012 which saw over 40,000 financial advisers leave the market.
Local advisers will continue to be able to offer a specialised personal service for those who want it.
The FCA is also concerned about the ongoing marketing of cryptocurrency now that they are responsible for monitoring their financial promotions. So far, the FCA has seen major problems with the way that the risk warnings around crypto are being dealt with. The problems fall into three broad areas. First where the type of font is too small and difficult to read, second hat there is not enough information being provided about the risks and thirdly that too many financial crypto promotions are saying that the investments are safe. Again, ignoring the huge risks and the need to be clear to customers.
However, the FCA’s actions do seem to be having an effect. Over the six months from April to September this year over 5,500 financial promotions have been withdrawn from circulation by over 50 firms. In addition, the reported over 500 incidents of financial promotions being made by unregulated firms.
