‘Finfluencers’: financial education and regulator surveillance


The figures show that searches are on the rise for useful and simple information on social networks and online communities. 71 percent of centennials and millennials appreciate financial information coming from someone like themselves, compared to 48 percent of the Baby Boomer generation (those born in the 1950s and 1960s), New Morning Consult reports. In addition, another survey published by the financial advice firm MagnifyMoney Advisor in January 2021, found that nearly 60 percent of investors under the age of 40 belong to investment communities or forums, and 46 percent had turned to social networks for information on investments in the previous month (by order of preference to YouTube, TikTok, Instagram, Twitter, Facebook groups and Reddit).

Transparency regarding risks

‘Finfluencers’ profit from these visits to their digital profiles, either by monetizing views of their channels, selling investment courses through sponsorships or by introducing promotional content. The transparency problems start when they do not indicate the risks associated with the products and strategies they mention, or when promotional content is not properly described as such. And it gets worse when their followers, due to a lack of financial education, do not understand the complexities in the markets and are not aware of the risks associated with the information they receive on social networks.

Many of those creating YouTube content add a disclaimer to each video, warning that the information they provide and their opinions are educational in nature and should not be interpreted as investment advice, so they are not responsible if it is used inappropriately.  Others put this disclaimer in more obscure places like the channel description page, where their followers barely see it. And on social networks like TikTok and Instagram, they disappear nearly completely, although the network itself adds a warning message on the general page for hashtags that it has identified as sensitive.

It is also important not to forget how social network algorithms work, recommending content similar to what the user is currently viewing.  In this case, a user could start by viewing educational content with accurate, proven information that weighs the benefits and risks, but end up with other, less credible content that hides hidden interests, or are actual scams.

Regulators react

For these reasons, regulators are paying close attention to this content. In Spain, Rodrigo Buenaventura, chair of Spain’s financial market regulator, the CNMV, has called on influencers and public figures to act responsibly to prevent “investors from falling into offers that could be erroneous or even fraudulent.”

CNMV warns of a change in investment patterns and of the risks of turning it into a “videogame”

Montserrat Martínez Parera, the organization’s vice chair, held a positive view of young people’s digital knowledge and familiarity with social networks: “It’s a way for them to get in contact with the investment world and seek advice. These new options are certainly useful and interesting.” But she also warned of a change in their investment patterns, of the risks of turning it into a “videogame” and the rising presence of unregulated products, which could turn into a breeding ground for fraudulent activities.

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