Becca Ngo didn’t intend to get her financial advice from TikTok. Rather, the 21-year old was searching for book recommendations on the social media app, which is known for serving up 60-second dance routines. But after “favoriting” a video about a financial book, the TikTok algorithm did its thing.
Ngo, who works in client support for a financial services company in Florida, recently started getting recommendations to watch all sorts of personal finance videos. That’s how she learned about Roth 401(k) plans, which let savers invest after-tax income into a retirement account while getting matching funds from their employer. Ngo took what she learned to her bosses, and convinced the company to begin offering it to employees.
“I always knew that saving was important,” said Ngo, adding that her aunt had opened her personal retirement account. “But I didn’t know anything about home buying, 401(k) or investing.”
TikTok, which has blown up in popularity in the last two years to become one of the world’s most popular social platforms, has gained even more steam during the coronavirus pandemic, with so many people at home and in need of entertainment. The app, operated by Chinese tech giant ByteDance, allows users to create short videos and overlay voices or music.
It’s been a huge hit among Gen Z (generally defined as people born between 1995 and 2015), reaching 2 billion downloads in April. In May, ByteDance surpassed a $100 billion valuation in private markets, according to Bloomberg, more than triple Snap’s public market value.
With so many users and so much knowledge about their interests, TikTok’s algorithms are directing people to a host of unexpected topics.
The financial advice community on TikTok remains relatively niche, but it’s growing. As of mid-June, the #investing tag had racked up 278.1 million views, while variations of investing (#investing tips, #realestateinvesting and #investing101) added up to millions more. Other categories are much bigger. The hashtag #homechef brought in 1.6 billion views and #maincharacter, a new meme that parodies movie montages, is at 2.3 billion.
Financial topics, typically of less appeal for consumers who want to be entertained, have gained particular relevance today because of the recession caused by the pandemic. Unemployment is at its highest since the Great Depression, and jobs in travel, hospitality, food and retail are likely lost for the foreseeable future. So videos that offer financial wellness tips in a consumable and comfortable way are resonating with people who are sheltered in place and struggling.
“There’s been a lot of people who needed a friendly reminder of the basics,” said Ashley Brambila, a certified public accountant who shares videos on TikTok under the username @ash.brambila. Brambila, who lives in Nevada, also has videos that talk about debt and savings.
Still, some experts warn that while TikTok may be a good way for young people to learn general financial tips, content creators could be glossing over important topics without conveying the risks that come with investing.
“I don’t have too much of a gripe with going into basics,” said said Doug Boneparth, a financial advisor and president of Bone Fide Wealth in New York. “My reservations come into play if someone makes it light work or says it’s easy to make money in the markets. I can assure you that it’s not.”
Boneparth said he’s worried about TikTok accounts, some with thousands of followers, that promote day trading and get-rich quick ideas.
One account that goes by the moniker @TheBusinessKid suggested buying hard-hit stocks like airlines and cruise lines, telling viewers that those industries will “bounce back after this is all sorted out.” CNBC reached out to the account owner through TikTok and Twitter, but did not immediately respond.