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Watchdog looks to crack down on ‘finfluencers’
by cityam
JESS JONES
YOUNG people are increasingly turning to social media for investment ideas even as the Financial Conduct Authority (FCA) looks to crack down on the field of finance influencers –or ‘finfluencers’.
Over a fifth of investors aged between 18 and 34 are taking investment advice such as stock tips and market forecasts from Instagram gurus and influencers, according to a new Opinium survey of 2,000 people commissioned by Hargreaves Lansdown.
Other social media forms are also popular with young investors, with 16 per cent browsing Facebook for ideas, 14 per cent sourcing inspiration from Reddit and eight per cent scrolling through Tiktok for guidance.
These figures are up since September 2021, when only 17 per cent of this age group said they consulted social media for investment advice.
Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: “While engagement with investing should be applauded at any age, taking tips from unregulated or unverified sources, such as social media, should be done with caution.”
Responding to the study, an FCA spokesperson said that although social media has helped firms communicate with consumers more effectively, the regulator wants to “ensure that consumers can access high quality marketing information that enables them to make informed financial decisions”. with geopolitical uncertainty, continued to erode confidence and impact deal volumes,” said Alex Hartley, head of private equity within corporate finance at KPMG UK.
“We are updating our social media guidance to firms to clarify what we expect when marketing financial products online,” the spokesperson said.
Just last month, the FCA said it was set to roll out new social media guidance to “modernise the information firms should use when promoting financial products or services online”.
The social media clampdown aims to target ‘finfluencers’ and firms flogging crypto schemes and financial products online with misleading adverts.
“Among the guidance is a reminder that some of these promotions can actually constitute a criminal offence,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.
Finfluencers are a growing cohort.
Last August, it was estimated that finfluencers saw an average of eight per cent annual growth in followers in 2021 – double the growth rate of all other influencers – according to a report from Performance Marketing World.
Listed firms in the UK had widely been predicted to be at risk of a flurry of takeover swoops as buyers took advantage of low prices in the UK.
While dealmaking has slumped dramatically from a blockbuster year in 2021, Hartley added that the number of private equity deals was still on a par with pre-Covid levels.
