Beware of ‘finfluencers,’ NASAA warns
The organization of state regulators cautions about taking advice from social media financial influencers because of possible conflicts.
The North American Securities Administrators Association, the professional group of state and Canadian provincial securities regulators, has recommended that investors use caution when considering advice from social media financial influencers, or “finfluencers.”
“Investors should keep in mind that ‘finfluencers’ are not subject to the same regulations as licensed financial professionals and may have undisclosed conflicts of interest,” Melanie Senter Lubin, Maryland securities commissioner and NASAA president, said in a statement.
In an Informed Investor Advisory, NASAA explained that a finfluencer is a person who, by virtue of their popularity or status on social media, is capable of making recommendations that influence the financial decision-making process of others.
“They may seek to influence potential investors by publishing posts or videos to their social media accounts, often stylized to be entertaining so that the post or video will be shared with other potential investors,” the advisory said.
The advisory includes information to help investors better understand how influencers operate, what to consider when considering financial advice they encounter on social media, and where to go for help with concerns about a possible finfluencer.
The advisory also points out red flags to consider including dubious advice, unverifiable or outdated financial credentials, or investment recommendations that aren’t backed up by accurate data.
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