“Last year we saw an increase in the use of bloggers and influencers on social media such as Instagram, Facebook, and YouTube, promoting financial products, particularly investment products, to younger age groups. We also saw an ongoing trend in the number of bloggers promoting credit on behalf of unauthorised third parties, with a particular growth in financial promotions targeting students," it said.

With social media channels showing no sign of losing their hold on the younger generation, and shifts in work/life patterns continuing to feel the impact of technology, the finfluencer sector needs to change, the CFA Institute said. 

The report, Finfluencer Appeal: Investing in the Age of Social Media, looks at what’s driving interest in new ways of dealing with their finances – and the associated risks. The report reviewed 110 unique pieces of finfluencer content on YouTube, TikTok, and Instagram in the UK, US, France, Germany and the Netherlands. The authors of the study also interviewed young investors. 

“Finfluencers now play an increasingly significant role in educating young people about finance, with accessible content that is both informative and engaging,” Rhodri Preece, senior head of research, CFA Institute, said. “However, our research shows that finfluencer content often lacks sufficient disclosures, which can hinder the ability of consumers to evaluate the objectivity of the information, and some investors may be unaware when and how finfluencers are being paid to promote financial products.”

While some might query the benefits of "finfluencers," others argue that it is a trend with value behind it. According to alti.com , figures in the fintech sector say social media is essential for democratising access to financial education and personal finance, relying on the intersection between social media and financial inclusion. It also quoted Nicky Senyard, CEO at Fintel Connect, as saying: "Financial literacy is not widely taught in schools, and many parents lack financial knowledge. They have made finance less intimidating to discuss by creating interesting and easy-to-understand content in formats that this audience wants."

The numbers
Across the content reviewed by the CFA Institute, 45 per cent of it offered guidance , 36 per cent included investment promotions , and 32 per cent included investment recommendations . More than half of content containing a promotion included a disclosure, compared with 20 per cent of content containing a recommendation. 27 per cent of content included an affiliate link.

“Many finfluencers inadvertently provide financial advice that may be subject to regulatory scrutiny or that violates applicable laws,” Ignacio Ramirez Moreno, a LinkedIn finfluencer, said.

The phenomenon is a global one. In December 2021 for example, the European Securities and Market Authority issued a “Statement on Investment Recommendations on Social Media.” In the US, on 13 December 2022, the Securities and Exchange Commission announced charges against eight individuals in a $100 million securities fraud scheme in which they allegedly used the social media platforms Twitter and Discord to manipulate exchange-traded stocks.