What are fin-fluencers? Investing Explained

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What are fin-fluencers? Investing Explained

In this series, we bust the jargon and explain a popular investing term or theme. Here it's fin-fluencers.Sounds fishyIt can be. Fin-fluencers are inf

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In this series, we bust the jargon and explain a popular investing term or theme. Here it’s fin-fluencers.

Sounds fishy

It can be. Fin-fluencers are influencers who use Facebook, Instagram, TikTok, Twitter, YouTube and other social media to dispense financial advice or to sell investments, loans and crypto-currencies.

The recent surge is alarming regulators worldwide who fear the unwary are being misled into parting with their life savings or encouraged into running up huge debts.

The rise of the fin-fluencer began in the pandemic as more young people began to invest in the hope of fast profits, with some looking for a ‘side-hustle’ – a way to supplement their earnings.

What do fin-fluencers do?

A few talk about their own experiences of overcoming financial problems, which can be instructive. But others claim that certain high-risk investments are a guaranteed way to get rich overnight.

Be wary: Fin-fluencers are influencers who use social media to dispense financial advice or to sell investments, loans and crypto-currencies

Be wary: Fin-fluencers are influencers who use social media to dispense financial advice or to sell investments, loans and crypto-currencies

How big is the fin-fluencer sphere?

Large and growing fast, which you will discover if you type the hashtags #personal finance #sidehustle or #investing into Instagram or TikTok and watch the videos from all over the world. Celebrities have even been joining the fin-fluencer gang.

Oh? who?

Kim Kardashian, though it has not gone well. She agreed to pay $1.26m to the US Securities and Exchange Commission (SEC) for failing to disclose the $250,000 fee she received for Instagram posts about ethereum, a crypto-currency.

Michael Owen, the former Liverpool and England footballer, removed a tweet for NFTs (non-fungible tokens), also based on ethereum, following an approach from the Advertising Standards Authority. Matt Damon appeared in controversial crypto ads with the ‘fortune favours the brave’ slogan.

Any scams in the UK?

Fraudster fin-fluencers routinely use the name and face of Martin Lewis, the hugely respected founder of MoneySavingExpert, to swindle victims. Lewis’s Instagram account, however, warns that he does not appear in advertisements or agree to be in promoted posts – and he does not recommend crypto or get-rich-quick schemes.

What are watchdogs doing?

The Financial Conduct Authority (FCA), the City watchdog, asked businesses to amend or remove 8,582 promotions last year – 14 times the number that attracted the body’s scrutiny in 2021.

What are the big concerns?

The FCA fears fin-fluencers are exploiting the cost of living crisis to prey on the vulnerable, enticing them into get-rich-quick schemes, but also into debt – with students a particular target. Watchdogs are working with Big Tech to ensure that promotions have been approved by FCA-authorised firms.

TikTok has a special section with guidance on how to spot scams. But, when caught up in the enthusiasm for easy money, do people read such alerts?

Where do I find a regulated adviser online ?

The FCA’s website sets out the steps you should follow, including checking the individual’s details on a register of authorised firms. It can also be worthwhile following the social media accounts of investor platforms like AJ Bell, Hargreaves Lansdown and Interactive Investor. These offer useful updates and views from experts.

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