Since the first social media platform was launched in 1997, online use of apps such as Facebook, X (formerly Twitter), and Instagram has soared.

Indeed, many of us rely on social media for guidance on everything from what to cook for dinner to where to go on our next holiday.

Yet, while the internet provides a rich source of accessible information and entertainment, some content might be best read with caution.

According to FTAdviser, more than 70% of financial advice on social media is misleading. For example, 57% of the content reviewed “guaranteed” wealth or returns – an impossible feat due to the inevitable volatility of stock markets.

 If you or your loved ones rely on “finfluencers” – online personalities who offer financial advice – to guide your financial behaviours, read on to discover three important reasons why it might be safer to seek professional advice.

1. Finfluencers are often unqualified and unregulated

In the study published by FTAdviser, only 13% of the content analysed was produced by creators with relevant qualifications or credentials to speak about financial matters, and 83% of videos lacked the disclaimers necessary to make viewers aware of potential risks.

It is perhaps then unsurprising that so much of the “advice” given by finfluencers is misleading.

In recent years, the Financial Conduct Authority (FCA) has clamped down on the distribution of unregulated financial advice online.

In March 2024, the FCA published its final guidelines for financial advertising on social media. The rules state that promotions must be “fair, clear and not misleading and support consumer understanding”.

Furthermore, “unauthorised persons, such as social media influencers, who promote a regulated financial product or service without the approval of an appropriate FCA-authorised person may be committing a criminal offence”.

While these FCA rules represent an important step forward in protecting users from unregulated and potentially misleading financial content, it’s important to remain vigilant.

Yet, worryingly, FTAdviser, found that half of UK adults using social media for financial advice do not verify the reliability of finfluencers and their content.

An easy way to sidestep the uncertainty and risk involved in relying on finfluencers for financial guidance, is to seek advice from a regulated financial planner who is overseen by the FCA. Such professionals must have certain credentials, accreditations and qualifications in place. They must also comply with rules of ethical practice such as the Consumer Duty, which sets a high standard of consumer protection.

As a result, working with a financial planner could provide valuable peace of mind that you’re in safe hands.

2. Online advice is not the same as personalised advice

Finfluencers generally operate on a one-to-many basis. This usually means giving generic advice about the “right” way to do things. The implication is that if you follow the finfluencer’s guidance, you’ll be sure to achieve the promised outcomes.

Unfortunately, this simplistic, one-size-fits-all approach is unlikely to fit your unique circumstances, needs, and goals.

You could waste considerable time and money pursuing strategies and opportunities that will do little or nothing to help you progress towards your goals.

On the other hand, an independent financial planner will assess your specific financial situation and create a bespoke plan that aligns with your financial objectives and life aspirations.

What’s more, you’ll have ongoing, personalised support for as long as you need it. If your circumstances or priorities change, your financial planner can help you adapt your plan accordingly.

3. Following finfluencers could lead to emotion-based financial decisions

Many finfluencers are articulate and charismatic. They might seem highly knowledgeable, and they may even call themselves a financial “expert” or “guru”.

Over time, your favourite finfluencer’s claims of five-star testimonials and incredible riches might make them seem trustworthy.

This could lead you to make financial decisions based on your emotions rather than data, logic, and considered research.

Imagine that a finfluencer you’ve been following for some time shares a “hot tip” about the latest investment trend. They tell you how much money they’ve generated from this opportunity, which is only available for the next 24 hours.

If you feel you know and trust the influencer, you might rush to invest for fear of missing out.

Unfortunately, this type of emotion-based financial decision-making could leave you vulnerable to scams and more prone to putting your money in unsuitable or high-risk investments.

For example, you might be convinced to invest in a speculative bubble such as GameStop. While some investors achieve high returns from such opportunities, many make significant losses.

Alternatively, an online “adviser” might persuade you to invest in a product or asset that is “guaranteed to make you richer”. When in reality, the finfluencer has a vested interest in the opportunity and is motivated purely by the desire to line their own pockets.

As you can see, relying on finfluencers for financial advice can be a minefield.

In contrast, independent financial planners provide unbiased and impartial advice. They will perform the necessary due diligence to ensure that any financial options they suggest to you are reliable and suitable for your individual needs.

Get in touch

If you’re interested in working with qualified and regulated financial planners who can provide a bespoke service, we’d love to hear from you.

Please email info@doddwealthcare.co.uk or call 01228 530913 / 01768 864466.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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