Finfluencers, or social media influencers who share financial information and advice, are taking social media by storm with their clickbait headlines, easy-to-understand messages, and promises of quick wealth. But because finfluencers are not regulated, it means they can say whatever they want about any topic from buy-to-let to Bitcoin, without any consequences. So as a potential investor, what do you need to be aware of when you see finfluencer content?
Approach with caution—Popularity does not equal success, so approach personalities with a healthy degree of skepticism. Just because a video has 100,000 or a million views does not mean it is advice worth following. If there are videos you think are valid or interesting, use them as a jumping-off point to do your own research.
Get the full picture—If someone tells you they made 50% on a bitcoin investment in the last month, that would be true. But it is also the case that the price of cryptocurrency has dropped by almost a third in the last four months.
As with any investment, it is important to have all the information at hand in order to make sound decisions, especially when someone may suggest that they have a sure-fire way to make money quickly. It may not be that finfluencers are trying to deceive you, simply that there is not enough space in the video to tell the full story—or they don’t have all the information themselves.
Ensure it’s not a scam—At a time when cyber fraud is a daily fact of life, scams proliferate on social media. In 2019, Action Fraud said that more than £3m had been lost in 356 fraudulent “get rich quick” schemes on Instagram over a five-month period, with most of the victims aged between 20 and 30. Scammers promised high returns within hours of investing.
Being aware of the issues surrounding finfluencers makes you a savvier investor. Their promises of getting rich quick can be exciting but highly risky; however, earning returns more slowly, over time with considered investments, can truly transform your life.