Finfluencers – Be careful who you get advice from online

Whenever you have a question where do you go to find the answer? Most people go online. It could be using Google or another search engine, or a social media site. Younger people are increasingly using social media sites for research purposes, especially TikTok and Instagram. This includes financial advice. According to a recent survey 76% of younger people said they regularly use platforms like TikTok, YouTube, and Reddit for financial advice.

This has led to an increase in influencers providing financial advice on a myriad of topics, including investing. The term that has been coined for people providing financial advice online is finfluencers. It has also led to a ton of bad, and in some cases illegal advice being shared by many of these finfluencers.

If you are getting investment advice from a finfluencer be cautious. Anyone can say they’re a financial expert online without the knowledge or experience to back up those claims. Be extremely cautious of any finfluencer promoting “get rich quick schemes,” “financial tricks no one wants you to know about,” or investments that are “going to the moon.”

One of the dangers of taking advice from a finfluencer is, unless they disclose it, you do not know if anyone is paying them to recommend a certain investment,  product, or investing platform. Is it really a good investment or is it just a way for the finfluencer to get paid? There may be rules and laws around this type of disclosure, but it is extremely hard to police and track when thousands of videos are being posted to social media sites daily.

Here are some things to consider when getting investing advice from a finfluencer:

Not all investment advice is for everyone: Most finfluencers providing investment advice do not single out individuals. They will try to reach as large an audience as possible for more views and likes. This is problematic as their investment advice may not necessarily fit your investing profile.

Lack of credentials: Most finfluencers do not have education or professional background in finance or investing. If a finfluencer does claim to be registered, works in the investment industry, or holds some type of designation, check to see if they’re telling the truth and that they’re in good standing.

Reckless advice: Some finfluencers provide basic advice that may be somewhat helpful to someone looking for basic financial literacy help. However, finfluencers that promise their advice will lead to massive profits, or a life of financial freedom could end up sending you down a path of massive losses and a life of destitution. When it comes to investment opportunities we often say if it sounds too good to be true it probably is, and the same applies to investment advice from finfluencers.

Lack of data: Most posts on platforms like TikTok or Instagram are less than a minute in length. This is not enough time to provide any real data or insight into why the investment advice a finfluencer is providing is legit. It’s one thing to boast about amazing investment results, but it’s another thing to prove they exist and to show how the finfluencer got there.