The influence of Finfluencers should not be overlooked as some of the top players have over a million followers. Since their posts may involve investment guidance, promotion or even recommendation, investors should exercise caution and avoid following their advice lightly.
Investors often need to seek for professional advice when making investment decisions. They might consult investment advisors in the past, but many people, especially young ones, now turn to Finfluencers instead. In the age of social media, the flow of information makes it easier to obtain investment advice. However, investment advice is important, and readily available advice may not be completely useful.
Look for Fun and Quality
Successful Finfluencers usually discuss investment and money management in an engaging and interesting manner, along with various audio-visual effects and interactive and game elements. Those who follow them for pleasure and entertainment only need to consider how interesting their content is. However, if we are making investment decisions based on their advice, then we have to consider the quality aspect.
Investment advice and recommendations need to be based on extensive analysis and data. When considering investment recommendations from analysts or Finfluencers, we should consider the analysis and justifications carefully. A Finfluencer does not need any licences and related work experience. If a Finfluencer lacks relevant licences, professional and academic qualifications, and work experience, we should exercise caution when evaluating the credibility and reliability of his or her investment advice. Wrong advice may expose us to higher risks.
Sharing or Marketing
Sharing is the key feature of social media. We may assume that Finfluencers only share their personal insights without any underlying objective. However, the content they post may be part of a marketing campaign. If a Finfluencer receives renumeration, commission or sponsorship for marketing certain investment products without making proper disclosure, it would be difficult for the followers to determine whether the content is objective and fair, and they may be misled.
Investment Scams
As investment advice has always in high demand, scammers exploit this and operate different investment scams, such as “ramp and dump” under the cover of sharing personal experience and insights and providing investment information and tips on social media. Followers of Finfluencers and investment groups should beware of the risks associated with investment scams.
Investing is often considered a personal matter, and we should consider our own circumstances, such as investment objectives, risk tolerance and investment horizon. Independent analysis is also essential. While Finfluencers’ advice can be taken as reference for our own analysis, we should think twice before making a decision. It would be wise to check out and compare the opinions of different Finfluencers.
In March of this year, CFA Institute and CFA Society Hong Kong hosted an investor education webinar to study the Finfluencer market from different perspectives and help investors understand the factors to consider when referring to the opinions of Finfluencers. Those who are interested can watch the video of the webinar.
