The Age of the Finfluencer: Who Should You Listen to When Everyone’s Talking?

Scroll through your social media feed after a major move in the market, and you’ll see a flood of hot takes, bold predictions and “can’t-miss” tips. Welcome to the age of the finfluencer—a social media influencer who broadcasts their takes on investing, budgeting and other financial topics to large online audiences.

Here’s the thing: A finfluencer might be a highly credible financial professional, or they might be an enthusiastic amateur. They could be a sports star who dabbles in cryptocurrency or a trendsetter who has big thoughts on budgeting.

But regardless of who’s dishing out advice, people are listening. In fact, more than 40% of people have considered acting on advice from finfluencers—and that number is higher among younger investors.

And while some advice may be sound, much of it is self-serving or flat-out wrong. Separating good advice from bad isn’t always easy. While regulators in India and the UK are cracking down on finfluencers, the U.S. remains largely hands-off, leaving consumers to fend for themselves. The good news? You have the power to protect yourself—and your loved ones—from risky financial advice. Here’s a closer look.

The Hidden Risks of Online Advice

When it comes to financial advice from big names in social media, there are several concerns:

Accuracy. Posts on social media spread because they’re engaging, not because they’re accurate. Plus, it’s not always obvious which finfluencers are academics or professionals with expertise who may be pushing sound advice, and which ones aren’t. One thing you can do is investigate their backgrounds. For instance, look up financial advisors using the Investment Advisor Public Disclosure webpage to find out if they are registered to offer investment advice and whether they’ve had any complaints or regulatory action taken against them.

Relevance. Even if a piece of financial advice on social media comes from someone knowledgeable, it still may not be useful to you. Your financial plan is tailored to suit your unique circumstances and goals. Finfluencers aren’t considering your personal financial picture and life goals. So even tips that are basically accurate may not be relevant to you at all.

Bias. Finfluencers—like all social media influencers—are obligated to disclose when they’re being paid to promote. Back in 2022, the SEC fined Kim Kardashian $1.26 million for failing to disclose that she was paid $250,000 to promote a cryptocurrency on Instagram. But even if they’re not getting paid, they might be pushing an agenda or simply trying to bump up their page views. If they lead you astray, they may not face any consequences at all.

Increased risk. Investors who rely on social media for advice may be more likely to invest in riskier assets. Social media investing played a significant role in driving up the price of meme stocks beginning back in 2021. The Federal Reserve warned that social media may increase risk for individual investors and the entire financial system due to speculation and a bias toward riskier stocks. 

A Note on Confirmation Bias

Speaking of biases, social media platforms are basically designed to become echo chambers. Algorithms learn what kind of content you like and feed you more and more of it. If your feed is tailored to your tastes and opinions, the posts you’re seeing may land you in the behavioral trap known as confirmation bias. Confirmation bias describes the very human tendency to favor messages that reinforce our preexisting beliefs. If the financial advice we’re seeing confirms what we already think, we’re more likely to accept it—and perhaps act upon it—whether it’s valid or not.

Learning to recognize this bias can help you counter it, which involves questioning your beliefs and seeking alternatives that may challenge your point of view.

How to Avoid the Noise and Protect Your Money

In the end, just because a social media account is popular doesn’t mean the information it presents is trustworthy. It’s completely fine to consume media because it’s entertaining but avoid allowing the advice you see to drive your financial decisions.

Not sure who to trust? Seek a financial advisor who holds the CERTIFIED FINANCIAL PLANNER(TM) (CFP®) designation. This certification indicates that the advisor met extensive training and experience requirements and is committed to CFP Board's ethical standards, which require putting clients' interests first. The CERTIFIED FINANCIAL PLANNER(TM) practitioners at Allegheny Financial Group can help you sort valuable information from the noise, ensuring that the advice you receive is accurate and relevant to your financial plan.

Allegheny Financial Group is an SEC Registered Investment Advisor.

The information included herein was obtained from sources which we believe reliable.