In today’s hyperconnected world, the influence of social media influencers on investment decisions cannot be overstated. From everyday individuals to high-profile celebrities, these “finfluencers” are playing a significant role in shaping public opinion and guiding investment strategies. However, it’s important to remember that just because someone has a substantial online following doesn’t necessarily mean their “advice” is universally applicable or optimal for your financial goals.

Finfluencers on social media can quickly reach a large audience and hold considerable power in shaping the investment choices of hundreds or thousands of individuals. They utilise their platforms to provide details about their personal investments, make recommendations on financial products, offer guidance on managing finances, and promote specific investment opportunities or financial brands.

Sometimes facts are presented in a fair and impartial way. However, it’s essential to approach their “advice” with caution, considering the potential for misinformation and the lack of formal education or experience in the financial industry among some influencers. Facts spread just as fast as misinformation.

When considering ‘financial advice’ from social media influencers, individuals should consider these questions:

• Do they receive compensation for promoting a product?

Because they get paid to do so, celebrities and influencers may share investing or financial ‘advice’. This does not imply that the ‘advice’ is applicable to you or your circumstances.

• Do they have the qualifications to offer financial advice?

Verification of an individual’s professional designations or financial certifications is vital for ensuring the credibility and expertise of the advice being provided. Hong Kong registered advisers are posted publicly on the register, found here. Verify their license to see whether they are in good standing and if they have any public disciplinary actions against their name.

•  Do they make big promises?

Some finfluencers could make bold claims regarding stock selections or investment techniques without providing evidence to support them. Some suggestions might prove to be beneficial, but others are likely to fail. It’s advisable to be skeptical of such suggestions and to get a second, knowledgeable opinion before proceeding.

• Do they claim to be an expert? Or are they entertainers?

Finfluencers on social media thrive on expanding the audience for their posts. In order to expand their audience, they could employ strategies to make their material engaging and interesting. This may indicate that the advice they give is not applicable to individuals who seek trustworthy, independent advice.

• What could go wrong if I follow this ‘advice’?

Finfluencers may have quite different portfolios or budgets than you, however they may offer precise ‘advice’ on what stocks to buy or how much to spend. In actuality, you are the only one who knows how much money you have to invest. Understand your level of risk tolerance and avoid investing money you can’t afford to lose.

While social media can be a valuable source of information, it is essential to recognise the uniqueness of one’s financial goals and objectives. Influencers may garner attention, but their ‘advice’ is not necessarily tailored to a person’s individual circumstances.

In recent news, the Financial Industry Regulatory Authority in the US recently concluded an investigation regarding unregulated content used by finfluencers. The investigation revealed regulatory violations by Robinhood, a trading platform for their use of influencers, resulting in a hefty fine of US$26 million and restitution to over 10,000 customers. The firm failed in its duties by not monitoring influencers’ content, leading to misleading statements about their products and services.

Despite influencers claiming Robinhood was fee-free, undisclosed charges applied. This case underscores the importance of transparency and regulatory compliance in influencer partnerships.

Seeking the guidance of a qualified financial planner who can provide personalised advice in line with specific financial aspirations, thereby ensuring informed and effective decision-making amid the inundation of influencer-driven content. By working with a financial planner, individuals can benefit from tailored strategies and comprehensive financial expertise that align with their unique goals and objectives.