Millennials are more prone to lose money in financial scams than their elders.

With years of attention paid to educating older Canadians about protecting their money from fraud, it may be surprising that many younger investors have fallen victim to get-rich-quick pyramid schemes, bogus virtual currencies, and more.

Perhaps equally surprising is how New Brunswick’s financial and consumer services regulator feels Millennials are disinclined to take financial advice from a Crown corporation.

“We know this demographic is notoriously difficult to reach,” says Marissa Sollows, the director of education and communications with The Financial and Consumer Services Commission of New Brunswick (FCNB).

In an interview with Huddle, Sollows cites FCNB’s research, in addition to research coming from other provincial commissions, confirming millennial investors are in some cases at higher risk of falling for poor investment pitches or making decisions without the right financial knowledge.

In the first nine months of 2021, 20 New Brunswickers reported losing nearly $711,000 in crypto investment scams, according to the Canadian Anti-Fraud Centre.

“When we started looking at this situation in New Brunswick, it became clear as we saw different trends in DIY investing and interest in crypto and that this was an audience that we needed to try and reach,” explained Sollows.

Not your parents’ investment landscape

Sollows says Canadian investors in their 20s and 30s approach their finances from a different cultural perspective than their predecessors: research shows they are less likely to want to work with a financial advisor and want more hands-on control over their investments.

But Sollows says there is also fear that they don’t know enough about investing and are worried about losing money.

“To come from a regulator, we sort of recognized it wouldn’t work as well for this audience, who get their information from different sources and who have different levels of trust with those different sources,” said Sollows.

In an effort to respond with something meaningful for the Millennial segment, FCNB designed a new awareness campaign that was outside its traditional outreach.  Where social media has hooked young investors on finance, FCNB decided to put more of its campaign resources on YouTube, Twitter and, for the first time, TikTok.

For Sollows, that meant focusing not just on what channels Millennials were getting their financial information from, but also trying to understand how they were interacting with those they perceived as “experts” and where that financial advice was coming from – whether legitimate registered online trading platforms or somebody purporting to be an expert with a hot tip.

“There’s a much higher level of comfort, with the younger generation, with technology and with putting trust in their peers in these different online forums as opposed to going to a traditional financial advisor that their parents would have had more trust in,” says Sollows.

On Nov. 22, FCNB launched “The Right Recipe,” a new investor education campaign targeting Millennials and do-it-yourself investors with resources designed specifically for them.

FCNB campaign videos serve as explainers on a variety of topics–including fad investing, multi-level-marketing schemes, influencer scams, and high-risk investment products–while reinforcing the steps any investor can take to protect themselves and their money.

Do-it-yourself investing is exploding

Covid-19 lockdowns and uncertainty translated into a meteoric rise of online DIY investment platforms and trading apps, leading many to investment possibilities for the first time at the touch of a button. Others are getting their advice on social media and choosing instead to test unconventional methods. But, as Sollows points out, these often “prey on FOMO” (fear of missing out) on advertised payoffs.

The rise of “finfluencers” (a specific type of influencer who focuses on money-related topics) have made full use of platforms like TikTok, Instagram, and YouTube to get the attention of young investors.  Couple that with Millennials increasingly willing to devote cash on decentralized cryptocurrencies and hot stocks – with much of that advice coming at them through social media – and you’ve got a scene rooted in familiar tones.

Interactive Investor, A UK online investment service published a July survey showing more than half of young investors surveyed in the UK who have purchased cryptocurrency like bitcoin or dogecoin have done so using credit cards, or even student loan money.

More unconventionally, users of Reddit have made headlines swelling into pump-and-dump schemes targeting low-cost stocks for small companies.  Money inflating the value today might be worthless tomorrow on a pre-planned selloff, leaving young investors holding pennies of worthless stock days later.

Trendy concepts like “Impact Investing,” where a company gathers investment intenting to “generate measurable, beneficial societal and environmental impact, alongside a financial return,” have gotten young people to invest money for the promise of helping a greater good, which often leads to confusion and no return for the investor.

“It’s the same old scam,” according to Sollows, who says it’s just wrapped up in different wrapping paper with a different story around it.

“We’ve seen this kind of thing happen with ‘green investing’ in the past when renewable energy and so on was becoming really popular. The scammers would follow the headlines and build pitches around it.”

Financial awareness education is evolving

On the flipside, Sollows says there’s a need to help young investors navigate many of the legitimate online platforms out there. She hopes FCNB can be a trusted resource to help Millennials make some of their first investment decisions, especially when going the DIY route.

“The Right Recipe” depicts a fictional brewmaster who has heard a lot of financial tips over the years.

He’ll tell you that everybody knows someone who’s made a bundle in the markets. He figured if his customers could do it, why couldn’t he? The example allows the user to follow his investment journey, for better or worse, through videos.  That journey is everything from “listening to some rando’s advice on social media” to letting “FOMO be his guide” and blindly “following the latest investment trends.”

In addition to campaigns like “The Right Recipe,” FCNB also offers investment updates and fraud alerts emailed directly to those who sign up on its website and provides a variety of financial literacy topics through both in-person and through virtual presentations. Those sessions are offered to workplaces, classrooms, and the broader community, covering topics ranging from financial literacy and budgeting to investing to fraud prevention.

For navigating the investment learning curve and the possible pitfalls for young investors, Sollows believes the campaign would be a success if people used the information and experience of the brewmaster to instead follow their gut instead of social media when the offer seems too good to be true.

“If you’re being offered some crazy returns on things, and they’re telling you, ‘Oh, I can guarantee you’re going to make this much money and it’s so easy you don’t need to understand it — In any other aspect of your life, if somebody said that to you, would you keep the conversation going or would you walk away saying, ‘No thanks, I’m good.’”

FCNB’s The Right Recipe campaign will run until mid-February, in both English and French on most social media platforms and at: therightrecipe.ca.

Tyler Mclean is a reporter with Huddle, an Acadia Broadcasting content partner.

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