Finfluencers: sound advice or traps to avoid?

How to generate passive income? What are the best investments this year? Why buy ETFs? You have certainly already seen them on YouTube, Instagram or even TikTok: financial influencers (finfluencers) are numerous and talk to you about budget management, stock market investment or cryptocurrencies. Why do they attract so much attention, and what pitfalls should be avoided? myLIFE gives you a few pointers to help you separate the wheat from the chaff.*

It is a fairly typical early evening for Manuel, who is relaxing while scrolling through Instagram. Between two videos, a piece of content catches his eye: “Investing €100 per month can pay off big time”. In less than a minute, using a few playful diagrams, the principles of compound interest and how ETFs work are explained to him, and he is offered a course to go further. It is clear, quick and attractive!

Such content has multiplied significantly over the years. Finance is no longer addressed solely by banking experts or specialised media, but also on social networks through a new type of content creator: finfluencers.

What is a finfluencer?

A finfluencer (a contraction of finance and influencer) is a content creator specialising in finance. They use social networks to help you decipher economic concepts, give you advice on wealth management or talk to you about financial investments.

They may be professionals from the sector (wealth managers, financial advisers, traders, etc.), but also self-taught individuals with no formal qualifications or specific training.

The success of financial influencers mainly relies on the relationship they manage to build with their community. Far from the institutional language that is often perceived as technical and abstract, they make financial information accessible by presenting it in a clear and straightforward manner. Their educational, friendly and direct tone helps to build a relationship of trust with their subscribers.

In addition, short and dynamic online formats quickly capture attention and reach a large audience, particularly younger generations who obtain information almost exclusively via social networks**.

Finfluencers actively contribute to financial education. Thanks to their visibility and the strength of social networks, they raise awareness among a wide audience, help break taboos around money and make topics understandable that are often considered complex or reserved for specialists.

What can financial influencers bring?

Finfluencers actively contribute to financial education. Thanks to their visibility and the strength of social networks, they raise awareness among a wide audience, help break taboos around money and make topics understandable that are often considered complex or reserved for specialists.

Specialised finance influencers may propose budget management methods and answer common questions, for example about investment funds, property or taxation. They also popularise concepts such as precautionary savings, diversification, financial planning, inflation, compound interest or volatility.

Following a finfluencer can therefore help you develop your financial knowledge, understand market trends or decipher certain investment products. Their content can also act as an entry point to more in-depth learning on these topics.

Some creators share accurate and nuanced information, while others spread approximate, biased, or even sometimes misleading statements.

What are the risks?

While the democratisation of financial information is a step forward, the quality and reliability of shared content remain highly variable. The desire to simplify things often unfortunately goes hand in hand with leaving out more technical elements, ultimately resulting in an oversimplified message.

Of course, some creators share precise and nuanced information, while others—often those with no training in the field and little experience—spread approximate, biased or even sometimes misleading statements. The situation becomes sensitive when messages encourage decisions that may have serious financial consequences.

Liam, 38, learned this the hard way. For several months, he had been following a financial influencer displaying a very comfortable lifestyle in Dubai and promising an exclusive strategy to achieve exceptional returns.

After paying several hundred euros to access a private group, he was invited to invest without delay in a stock presented as promising. Coordinated purchases by group members quickly drove up its value.

A few weeks later, the price suddenly collapsed. The administrators referred to a normal market correction, then disappeared. Liam eventually discovered that the influencer had been paid in shares to promote the investment and had sold them when the price was at its highest.

This was in fact a pump&dump: a manipulation consisting of artificially inflating the price of an asset through massive promotion in order to resell it at a high price, to the detriment of investors.

The rise of financial influencers calls for the utmost vigilance: popularity and follower numbers do not guarantee reliability. Moreover, social media algorithms prioritise content that generates the most engagement or emotion, sometimes at the expense of rigour. Here are some of the main risks identified (non‑exhaustive list):

> Simplification of complex concepts. As already mentioned, the short formats offered on social networks do not allow for in-depth treatment. Finfluencers aim to capture attention, improve their visibility and encourage interaction with their community. The messages conveyed are often incomplete and do not cover all aspects of a topic.

> Confusion between general information and personalised advice. A finfluencer addresses a broad community. They do not know your personal situation (age, income, debts), your objectives or your risk tolerance. Their recommendations are therefore not necessarily suited to your profile and may be inappropriate. Relying on their content to improve your financial education is one thing; letting them guide your investment strategy is another and is strongly discouraged.

While commercial collaborations or product sales are not problematic in themselves, it is the lack of transparency that raises concerns.

> Concealment of the remuneration model. Many influencers are paid through partnerships (affiliate links, product sponsorships, commissions) or through the sale of their own training, personalised support or e-books. While these practices are not problematic in themselves, it is the lack of transparency that raises concerns. Without knowing the influencer’s economic model, it is difficult to assess the objectivity of their message. A shared “experience” may in reality be nothing more than disguised advertising. You have been warned!

> Promise of high returns with no risk. Some influencers strongly promote the potential gains of particularly risky products while minimising, or even omitting, the associated risks. This unbalanced presentation may lead you to underestimate the risk of loss. Here, the recommendation is simple: entrust your investments only to recognised professionals.

> Amplification of behavioural biases. Social networks reinforce certain cognitive biases: fear of missing out (FOMO), confirmation bias which leads people to retain only information that validates a message, or herd behaviour which encourages imitation. These reflexes may distort your judgement when making financial or investment decisions.

What warning signs should alert you?

Fortunately, not all financial influencers are ill-intentioned. To identify questionable messages, certain practices should immediately raise red flags:

• • promises of significant, rapid and guaranteed returns.
  • no clear mention of risks.
  • pressure to make a quick decision.
  • opaque economic model of the influencer.
  • lack of detail about the product, strategy or how it works.
  • exaggerated emphasis on a luxurious lifestyle rather than on qualifications.
  • (…)

An honest financial influencer presents all aspects of a product, its advantages as well as its risks. They rely on reliable sources and provide understandable, precise and nuanced information. Finally, they clearly state whether they are sponsored or receive any remuneration or benefit linked to the promotion of a product or service.

By democratising information and making it accessible to as many people as possible, financial influencers can play an important role in financial education. They deserve credit for sparking interest and encouraging you to develop your knowledge. However, they should not become your sole source of information.

On your side, it is essential to research their profile and maintain a critical mindset when confronted with online messages. One golden rule regarding information remains, particularly in the age of social media and AI: check the source. Finfluencers do not replace in-depth analysis or professional, personalised advice. They cannot provide investment advice without complying with current legislation and without being regulated by the relevant supervisory authorities. For your part, any investment decision should remain well thought out and suited to your situation. Consulting a qualified professional remains by far the best approach.

* Content translated from French by the BIL GPT AI tool

** In Luxembourg, 99% of 18–24-year-olds get their information via social networks (MediaLux 2024).