It seems as if anyone with a camera, internet connection and social media account can become an influencer. While admittedly creating a following of thousands or tens of thousands isn’t easy, there isn’t much hindering anyone from going online and sharing information, tips or advice on any number of topics, including money and finance.
Finfluencers have emerged as a new resource, for young adults in particular, to get information and advice on personal finance, investing and money management. According to a report from CFA, Finfluencers have an average following of 128,000, with some of the more popular Finfluencers topping several million followers.
With this type of reach and influence comes responsibility, especially as it pertains to people’s money and finances. Just as you want to ensure your doctor or lawyer is qualified to help you, you want to ensure your Finfluencer is qualified as well.
What Motivates (F)inFluencers
The motivation for influencers in general, and likely Finfluencers too, most likely stems from a genuine desire to help people. This sincerity is what draws people to their content. People can see the passion for the topic coming from the influencer and want to know more.
Some people go online to try to achieve fame in one form or another. Movies, music and sports are notoriously hard to find success in, whereas creating an online presence can seem to be much easier. Building a following becomes a goal and the larger the following the better.
Cultivating that following, even around a topic you love is not easy and requires a lot of time, attention, hard work and dedication. Influencers make it look easy, but nothing is truly as easy as it appears. So while those seeking fame, might be satisfied by the growing following, most want to see monetary gain as well. This is achieved through sponsored promotions, affiliate marketing, ads and the like.
Influencers are great for connecting consumers to products or businesses. They are a very targeted way for companies to market to niche audiences with specific needs. Influencer marketing has exploded as a go to form of online marketing and now is an over $4 billion dollar industry in the U.S.
From passion to paycheck, online influencers must balance intent to help with desire to earn. This is especially true for influencers in categories that typically require licensure to practice, such as medicine, law and of course, finance.
Are FinFluencers Qualfied to Give Financial Advice
The internet, and social media in particular, have proved an invaluable service by delivering information of all types to audiences who might not have otherwise had access to it. The world of finance has always been a bit overwhelming for those with little to no experience in the area, but Finfluencers have pulled back the veil so to speak and have made participating in the world of finance not only approachable, but accessible.
Many Finfluencers are legitimate financial professional, starting out with a career in finance and possibly still working offline in finance as well. However, a great number of Finfluencers, including some of the most popular ones, have never worked as financial advisors. The CFA report mentioned earlier referenced yet another study that found as many as 80% of Finfluencers offered “tips” that may have qualified as recommendations and none of the sampled Finfluencers were licensed to provide such recommendations.
With Finfluencers serving as a conduit of financial information between people and the players that make up the world of finance, they bear a responsibility to not only offer accurate information, free of unqualified recommendations, but to also stay away from bias and remain above board, especially as it relates to sponsored partners and other business relationships that they may benefiting financially from.
Bias is strongly discouraged and could wrongly influence followers. What might appear to be a harmless plug from a very popular and obviously successful Finfluencer, may very well be illegal if they don’t disclose that they receive payment for endorsing the product or service they are plugging. FinRA (The Financial Industry Regulatory Authority) recently levied a hefty fine on a company for promotional content shared by Finfluencers on behalf of the company, illustrating that both Finfluencers and the companies they promote are not above the law.
How To Respond to Finfluencer “Tips”
For the most part, Finfluencers are sharing helpful information, educating the public at large on how to better position themselves for financial stability and success. The reach they enjoy and the broader, younger audiences that are interested in the information they are sharing serve to help many people make informed decisions.
However, with anything as important as your finances, it’s a good idea to get a second opinion and verify your information before acting on it, better yet, consult a licensed financial professional to guide you. Just because someone with millions of followers says to do x or y doesn’t mean it’s the right thing. Even if it’s solid information, grounded in sound research, it may not be right choice for your particular circumstances.
So learn from them, get inspired by them, use them to help you get exposed to aspects of finance you may not have been aware of. Then take everything you’ve learned and check it. Check it with a professional. Check it against your specific situation. Check it to be sure it’s a good decision for you and then act on it, only after you are sure it makes the most sense for you.