While it may seem like consumers these days are getting all of their financial advice from TikTok, that it not necessarily the case. But, as economic challenges mount, consumers are increasingly seeking financial advice from various sources, according to a published report. Many are turning to both traditional financial institutions and newer, technology-driven solutions like AI and social media.
Zoom out: Consumers across all age groups, particularly younger generations, are actively looking for help managing their finances, whether through traditional financial institutions (FIs) or emerging channels. While Gen Z and millennials are relying more heavily on sources like social media and AI, traditional banks remain the most trusted source of advice.
- AI is gaining significant traction, especially among younger generations, with 61% of Gen Z using AI for financial guidance. Social media is also being used, though it is less trusted compared to advice from professionals or personal networks.
- According to a PYMNTS survey, 57% of consumers sought financial advice in 2023, with 72% of those living paycheck to paycheck stating that inflation has impacted their ability to keep up with rising costs.
The big picture: While AI and social platforms are expanding access to financial advice, banks and other traditional FIs maintain an edge when it comes to consumer trust, particularly with major financial decisions. However, financial institutions must evolve to meet the growing demand for personalized advice, which is now seen as a critical service by many consumers.
- Nearly 70% of baby boomers and Gen X trust banks more than advice from friends and family. Interestingly, 61% of Americans would turn to a financial advisor if they received a windfall, underscoring the continued reliance on expert guidance.
What to watch: As AI-driven financial advice tools become more prevalent, traditional financial institutions and fintechs may need to adapt their offerings to remain competitive.
