Over the last few years, financial influencers, also known as finfluencers, have become more prominent on social media.
The global influencer market has experienced exceptional growth, rising from $1.7 billion in 2016 to $21.1 billion in 2023, according to Statista.
Finfluencers are influencers who offer advice and information on various financial topics
The FCA is concerned that some finfluencers are not labelling content appropriately
There are a lot of finfluencers that may do more harm than good
There are a number of ways to avoid bad advice or fake finfluencers
What is a finfluencer?
Finfluencers are influencers who offer advice and information on various financial topics, including saving, investing, cryptocurrency, and sometimes even ways to get rich quickly.
They usually offer advice in quick, easy-to-digest videos, which can be engaging – but may not provide all the information you need to make a fully informed decision.
While some finfluencers may offer genuinely helpful tips, following the advice of an uninformed finfluencer, a scammer posing as one or even a sponsored post from a celebrity can be costly.
Young people are particularly exposed to finfluencers, as 25% of 18-24-year-olds use social media when seeking financial guidance or advice, while 20% invest money based on social media recommendations, according to research by professional services company Deloitte.
This is concerning as finfluencers don’t need any financial qualifications or are regulated to give advice, so they are in danger of promoting risky products they don’t fully understand.
Additionally, as finfluencers make money via sponsored posts, referral fees or promoting financial products, this is something to be wary of.
The danger of finfluencers
One of the main sources of income for finfluencers is the promotion of financial products. This has recently come under fire from the Financial Conduct Authority (FCA).
The FCA is concerned that some finfluencers are not labelling some content as ads or are promoting inappropriate financial products without understanding the risks or how they work.
Some financial promotions could even be considered criminal offences if they fall foul of the rules.
How do you avoid bad advice and fake finfluencers?
While many fininfluencers offer good financial tips, there are a lot of finfluencers that may do more harm than good.
But with thousands of influencers online, how can you avoid bad advice or fake finfluencers.
Don’t assume an influencer is an expert: Just because someone is popular with millions of followers, it doesn’t mean they have financial qualifications. It’s worth doing some research to find out whether they are qualified to offer advice and if they have a financial education.
Is the influencer genuine? Sadly, there are ways for people to fake being an influencer – for example, they can buy fake followers. One way to check for this is to look at their engagement level as fake influencers can be revealed by generic comments and lack of engagement.
Be scam (and risk) aware: The number of scams has soared over the last few years, including ‘get rich quick’ investment schemes on social media. In the 2021/2022 financial year, investment fraud rose nearly 50% to £890 million. In some cases, scammers have posed as influencers or genuine influencers have promoted high-risk investments.
Always do your research: If you’re thinking of acting on advice from an influencer, do your own research so you can fully understand the risks. No scheme or investment is 100% risk-free and anything that sounds too good to be true most likely is.
Are they disclosing ads? Social media influencers who have repeatedly failed to disclose when they are advertising to consumers on social media channels are put on a list compiled by the Advertising Standards Authority (ASA).
Don’t take everything at face value: This is particularly important if an influencer is promoting an investment. For example, while they may have made gains by investing, it may also be the case that the value of that asset has dropped.
Consider regulated financial advice: One of the best ways to avoid bad advice that could cost you significant sums of money is to pay for it. Unbiased can connect you with a financial adviser regulated by the FCA who can offer personalised advice based on your circumstances.Get financial adviceWe’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.