The Rise of “Finfluencers” Among Young Investors
A new study titled “Finfluencer Appeal: Investing in the Age of Social Media” reveals that Generation Z, born between 1997 and 2009, is increasingly turning to social media influencers for financial advice due to their lack of financial literacy and limited interaction with traditional financial advisors. These young individuals prefer digital platforms for information acquisition, engaging heavily with content that ranges from investment promotions to specific financial guidance. The study found that 36% of such content involved direct investment promotions, while 32% recommended specific financial actions.
The Influence and Impact of Digital Financial Advice
Despite the appeal, the study highlights a significant concern: the lack of sufficient disclosures in finfluencer content. Only about 53% of promotional materials included proper disclosures, which poses challenges for viewers trying to discern the impartiality and accuracy of the information provided. The analysis, covering major platforms like TikTok, YouTube, and Instagram across multiple countries including the United States and the United Kingdom, suggests that while finfluencers are reshaping financial education with engaging content, there is a clear need for better regulatory oversight to protect consumers.
Call for Stronger Regulatory Frameworks
The CFA Institute’s Rhodri Preece notes that finfluencers play a crucial role in making financial information accessible and engaging for younger audiences. However, the variability in compliance and disclosure across regions creates complexity and potential legal risks for influencers and their audiences. The study urges regulators and social platforms to collaborate more closely with influencers to ensure content meets regulatory standards and helps establish a clearer framework for what constitutes regulated financial advice versus general financial information. This collaboration is essential to safeguard the interests of young consumers who rely heavily on social media for financial guidance.