Influencers who talk about money - known as finfluencers - are increasingly growing with social media flooded with them, dishing out ‘financial advice’. But are they sending you down the right path? Often with little knowledge or understanding of the products and services they are promoting, are regulators doing enough to protect consumers?
For those of you who do not know what a finfluencer is - it’s essentially an influencer who talks about money. If you have young adult children or grandchildren, the chances are they are following one of them.
No bad thing you could argue; financial education has been somewhat lacking, so why shouldn't an influencer fill the gap?
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But it’s become somewhat problematic. In recent years, we’ve seen influencers giving out wrong information, poor advice and even leading their loyal followers down the wrong path.
Often paid to promote a product, they do so with minimum knowledge and research around what it actually does.
We’ve all seen it - invest in crypto and be rich, buy this stock, or stop paying into a pension because the government will steal your money, the list goes on.
Celebrities too have jumped on board to exert their influence over financial products. Kim Kardashian has shared her ‘tips’ on buying crypto and love Islander are also bombarded with opportunities to promote products and have unknowingly led their followers into high risk get rich schemes.
Some influencers appear genuine - but it just takes a little research to find out how genuine they may be. I’ve seen some finfluencers talk about saving and budgeting, but also aggressively push matched betting links.
I should stress, there are some doing an excellent job, but as their following grows, it’s important they are educated and understand the risks they expose their followers to.
After all, this isn’t about buying the latest mascara - people can lose all their money, fall for scam or get into deep debt by following the wrong information.
FCA cracks down on finfluncers
It comes as no surprise to see the Financial Conduct Authority step up its actions against these influencers.
The FCA says that 58% of the under 40s who’ve invested in high-risk products like cryptocurrency were influenced by social media hype.
As Sarah Pritchard, executive director at FCA, markets, says: “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.”
The FCA has teamed with the Advertising Standards Authority to warn finfluencers that some financial promotions could be a criminal offence and aims to provide them with clear guidelines to follow which they should check before agreeing to promote products.
Whether this is enough though remains to be seen as the number of influencers and celebrities grow and financial education remains low.
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