Social media allows us to receive information at our fingertips.
Some of that information can be helpful, but some can be harmful. Knowing the difference is an important skill, especially when it comes to financial topics.
In this article, we explore the rise of financial influencers — finfluencers — and highlight important factors you need to know when using social media for investment information.
What Does a Financial Influencer Do?
Using social media for financial advice is becoming more common. Research conducted by the BC Securities Commission (BCSC) shows 33% of Canadians use social media to obtain information about investing once a week, or more.
Finfluencers often share personal financial experiences using music, graphics, and fancy jargon. It’s important to remember that while financial content creators seem passionate about sharing personal financial tips to help others, they may be motivated by revenue generation and increasing their followers.
Despite the confidence they may present in your feed, this doesn’t mean finfluencers are qualified to give you advice. A registered investment advisor has certain responsibilities to you – for example, they are required to know your personal risk profile and provide guidance in your best interests. A finfluencer is not.
To safeguard your rights, it’s good practice to check if the individual or the firm that you plan to seek advice from is registered to do so.
Finfluencers Connect with Young Adults Interested in Financial Literacy
Finfluencers’ popularity correlates with the users of the social platform they are on. Primarily, these audiences skew younger. On TikTok, influencers use trending hashtags to talk about topics like trading shares, crypto assets, start-up crowdfunding, and more.
Be wary of finfluencers who promise to help you get rich quick, invest with no risk, or push you to invest quickly. These are investment fraud warning signs.
Financial Influencers & Socially Important Topics
Finfluencers can seem relatable to their audience. They may have similar views on social justice issues. They may recognize that many want their investments to align with their values, and focus on topics like socially responsible investing.
Research conducted by the BCSC shows that 32% of younger women feel conflicted when it comes to investing. Some finfluencers have picked up on similar stats and focus their content on women’s empowerment, encouraging women to be financially independent and become more knowledgeable about investing.
Finfluencers – Fun, But Not (Always) Facts
A large social media following does not qualify a person to give financial advice. Consider the motivation of social media influencers, who may be fueled by views, engagement, compensation and followers. Just like all content creators, financial influencers may earn revenue through ads and endorsements.
Whether an influencer has to disclose anything about their compensation (or other benefits they receive from their posts or endorsements) can vary depending on the influencer’s location, the location of the targets of their communications (the audience), the specific laws that apply to them and even the policies of the platform they’re using. In British Columbia, the Securities Act requires anyone engaged in promoting the purchase or sale of shares they own, or where they do that promoting on behalf of an issuer or security holder, to clearly and conspicuously disclose when promotional materials are issued by them or on their behalf.
Keep in mind that a #trending topic isn’t always right for everyone. Crypto assets continue to draw attention and it’s important to be aware of crypto scams. As with any investment, slow down and do research or seek independent advice before investing. The BCSC’s Investment Caution List can help.
Investment fraud takes place on social media. If a financial influencer endorses an investment opportunity that sounds too good to be true, it could be a scam. Learn how to protect yourself from investment fraud.
Take our fraud prevention quiz and find out if you can spot the scam.
Fraud Prevention Quiz
No matter how entertaining an influencer may be, get investment information from a qualified source. The BC Securities Commission provides unbiased investor education and resources on InvestRight to help you make informed investing decisions.
Report a Concern
If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Contact Centre at 604-899-6854 or 1-800-373-6393 or by e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.
InvestRight.org is the BCSC’s investor education website. Subscribe to receive email updates from BCSC InvestRight.
