Should you trust finfluencers?
Financial influencers or ‘finfluencers’ are a major social media trend at the moment.
With millions of followers across platforms such as Instagram, TikTok, YouTube and elsewhere, these people purport to offer anything from small-time money tips to investing advice and financial ‘hacks.’ However the UK’s financial regulator, the Financial Conduct Authority (FCA), alongside the Advertising Standards Agency (ASA), has warned against finfluencers pushing financial products they have no authority on.
Far from helping you or your children with money, these finfluencers often recommend highly risky financial strategies and ideas that range from unregulated cryptocurrencies to straight up scams. Sarah Pritchard, executive director, Markets at the FCA comments: “We’ve seen more cases of influencers touting products that they shouldn’t be. “They are often doing this without knowledge of the rules and without understanding of the harm they could cause their followers. “We want to work with influencers so they keep on the right side of the law, as this will also help protect people from being shown scams or investments that are too risky.”
Can you trust finfluencers?
Finfluencers have become something of a global phenomenon in recent years, with millions of followers and a global reach. However, it is precisely this global reach that creates the first issues for anyone listening to what they have to say.
Top finfluencers such as Humphrey Yang, Tori Dunlap or Taylor Price have combined followings of nearly 100 million people. The first issue with these three is all are US-based. So, any information they pass on is likely not useful for anyone in the UK anyway. Also looking at their CVs, while Humphrey Yang says he’s an “ex financial adviser”, neither Dunlap nor Price appear to have any particular financial qualifications.
This phenomenon doesn’t stop with dedicated finfluencers however. Regular ‘influencers’ who routinely talk about areas such as beauty, food, travel and leisure are often paid by companies to promote products. Sometimes these can be innocuous things like face creams or clothing, but frequently people can be seen promoting financial products or investments that are wholly inappropriate. This is the nub of the campaign from the FCA which is warning against such activity.
The FCA partnered with well-known influencer Sharon Gaffka, famous for her stint on Love Island, in the campaign, who added: “When you leave a show like Love Island, you are bombarded with opportunities to promote products and work with brands, if like me, you’re new to this kind of work, it can be a little bit overwhelming. “This campaign with the FCA and ASA will hopefully make sure other influencers stay on the right side of the law and prevent them from unknowingly introducing their followers to scams or high-risk investments.”
Why financial advice matters
The allure of finfluencers is that they are easy to access and create content that is engaging – designed to capture your attention and make big claims based on spurious ideas. The reality of good financial management and long-term wealth growth is clear and concise planning and advice over many years, that takes into account different products, investment and strategies to achieve the strongest growth, income and tax efficient outcomes.
It’s essential that you speak to a financial adviser to ensure the best outcomes for your money. Conversely, if you have children who are achieving life goals such as home ownership and even saving for the future, it is important to bring them along on the journey too. This way they will have the best understanding of your plans, and how they factor in, and could benefit too.