As younger investors increasingly rely on social media for financial advice, they are also more likely to act on online misinformation and trust advice generated by artificial intelligence, according to recent research produced by both Nationwide and Edelman Financial Engines.

A Nationwide survey found that 34% of non-retired investors aged 18 through 54 reported acting upon misleading or factually inaccurate financial information seen online or on social media. This includes more than 41% of Generation Z and 34% of Millennial investors.

Older investors were more cautious about online financial advice, with just 6% of Baby Boomer investors reporting they had acted on misinformation online, the least of any generational cohort.

“Social media is a powerful tool and a great resource for learning about different financial topics, but it comes with plenty of misinformation as well,” Rona Guymon, Nationwide’s senior vice president of annuity distribution, said in a statement. “Online information can be inaccurate or not applicable to your situation. That’s why it’s important to scrutinize the financial information you find online—or better yet, turn to an adviser for help.”

Social media is also affecting investors’ financial self-esteem, creating unrealistic expectations of spending habits, according to the recent Edelman Financial Engines report, “Everyday Wealth in America.”

Among Edelman’s respondents, 74% believed that on social media, their friends portrayed themselves as wealthier than in reality. Meanwhile, 27% expressed feeling less satisfied with their financial status because of their social media feeds.

Due to social media pressures, one-third of respondents admitted to spending more than they could really afford, such as on a vacation, home renovation or luxury item. Furthermore, the fear of missing out and over-spending was reported at a greater rate for those who spend more than three hours per day scrolling through their social media feeds (51%), compared with less than one hour (16%).

AI-Generated Advice

The Nationwide report added that when considering the role of AI-generated advice, 34% of Gen Z and 37% of Millennial respondents said they would trust their financial professional more if the professional leveraged AI to inform the advice provided. Most advisers said they are planning to implement AI capabilities into their practice over the next 12 months, with just 19% of advisers saying they would not.

Advisers planning to implement AI into their practice said AI would be used as a supplement to personalized advice, rather than a replacement, Nationwide found. Nearly one-third (31%) are planning to use the platform for data insights, while 27% of advisers plan to use AI for client onboarding and education.

“While generative AI will likely continue to be an effective means of research and efficiency, it’s still important to have a qualified financial professional be part of the process,” Guymon said in a statement. “Financial professionals are familiar with the specific needs of investors and can review any AI-generated advice and action steps to be sure they are in the best interest of their clients.”

Nationwide’s research was conducted online from August 14 through 30, among 507 advisers and financial professionals and 2,404 investors aged at least 18 with investable assets of at least $10,000. Edelman’s research was gathered through an online survey of 2,022 Americans at least 30 years old from August 28 through September 8.