In the ever-evolving financial landscape, a new breed of market commentators has emerged: finfluencers. Celine Moran takes a closer look.

These financial influencers, typically on TikTok, Instagram, and YouTube, have transformed investing from something once perceived as inaccessible into a mainstream activity. But as their influence grows, so does the debate: are finfluencers empowering a new generation of investors, or are they a risky trend that regulators need to rein in?

For many young people, especially those outside traditional finance circles, finfluencers have become a gateway to understanding and engaging with investing, often by highlighting the potential gains they might be missing out on. However, this democratisation of investing raises a critical question: how much of this is a genuine opportunity, and how much is a risk waiting to unravel?

The Risks of Finfluencing 

The promise of financial freedom, quick gains, and FOMO-driven investment strategies has lured many into the world of stocks, crypto, and high-risk assets. However, history has shown that finfluencers can get burned, both by market volatility and regulatory scrutiny.

Take the case of Kim Kardashian, who was fined $1.26 million by the SEC for failing to disclose she was paid to promote a cryptocurrency. Or the collapse of FTX, where influencers faced lawsuits for promoting a platform that ended in disaster. These incidents highlight a critical flaw in the finfluencer ecosystem: many lack the expertise or accountability to provide sound financial advice.

According to a 2023 study by the UK’s Financial Conduct Authority (FCA), nearly 60% of financial promotions on social media failed to meet regulatory standards, underscoring the scale of misinformation.

For brands and financial services firms looking to leverage finfluencers, the risks are evident. Reputational damage, regulatory breaches, and an association with an individual who may become ‘cancelled’ can have lasting consequences. But does this mean finfluencers should be avoided altogether?

Regulation: A Necessary Guardrail? 

The rise of finfluencers raises important regulatory questions. Traditional financial advisers must be authorised, follow strict compliance rules, and act in their clients’ best interests. Yet, many finfluencers operate in a grey area, blurring the lines between education and promotion.

Regulation is tightening, but is it enough? Striking the right balance between oversight and accessibility will be key. Over-regulation could stifle innovation and prevent young investors from engaging with financial markets. Under-regulation, however, leaves the door open for misinformation, market manipulation, and financial losses.

Many young investors, myself included, are increasingly wary of finfluencer promotions and take extra steps to verify information before investing. While social media has introduced new investment opportunities, it has also made it easier to fall for hype-driven schemes. Personally, I’ve found that doing my own research and understanding my options, particularly with long-term investments, has helped me navigate this space more responsibly. This trend of increased caution among younger investors reflects a growing awareness of both the opportunities and pitfalls in digital finance.

A Growing Sense of Trust

Despite the risks, the landscape is shifting. As regulation tightens and audiences become more financially literate, finfluencers themselves are evolving. Many of the more successful and respected voices are, in fact, qualified professionals, often independent financial advisers (IFAs) in their own right, who are simply using social media to meet their clients where they are.

These influencers seem to be combining reach with real-world expertise. When a finfluencer has the credentials to back up their advice, whether that’s in pensions, mortgages, or ethical investing, they’re not just adding noise to the conversation. They’re helping demystify complex topics and bridge the gap between traditional financial services and digital audiences.

The Future of Finfluencing 

Finfluencers aren’t going away. If anything, they are evolving. They are partnering with reputable institutions, improving transparency, and facing greater scrutiny. The challenge for financial firms, PR agencies, and investors alike is navigating this landscape responsibly.

For businesses looking to collaborate with finfluencers, due diligence is crucial. Understanding the regulatory environment, working with credible voices, and prioritising transparency will be essential in mitigating risks while capitalising on this growing trend.

This shift is not without its positives. Why shouldn’t new types of investors have access to these opportunities? Historically, those who reaped the rewards of investing weren’t typically young women in their 20s like me. But what do you think? Are finfluencers an asset to financial literacy or a liability waiting to unfold?

If you’ve ever been influenced to start investing or take more control over your financial future through social media, I’d love to hear your experience. How did it work out for you?