“Influencers”: financial education and regulatory oversight

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The figures show that searches for useful and simple information are increasing on social networks and online communities. 71% of centennials and millennials value financial information coming from someone like them, compared to 48 percent of the baby boom generation (those born in the 1950s and 1960s), New morning consultation reports. In addition, another survey published by the financial consulting firm MagnifyMoney advisor in January 2021, found that almost 60% of investors under 40 belong to communities or investment forums, and 46% had turned to social media for investment information in the past month (in order of preference to YouTube, TikTok, Instagram, Twitter, Facebook groups, and Reddit).

Risk transparency

Benefit of “influencers” of those visits to their digital profiles, either by monetizing their channel views, selling investment courses through referrals, or introducing promotional content. The transparency issues start when they do not indicate the risks associated with the products and strategies they mention, or when promotional content is not properly described as such. And it’s even worse when their followers, for lack of financial education, don’t understand the complexities in the markets and are not aware of the risks associated with the information they receive on social networks.

Many of those who create YouTube content add a disclaimer to every video, warning that the information they provide and their opinions are educational and should not be interpreted as investment advice, so they are not responsible if it is used improperly. Others put this disclaimer in more obscure places like the channel’s description page, where their subscribers barely see it. And on social networks like TikTok and Instagram, they are almost completely disappearing, although the network itself adds a warning message on the general page for hashtags it has identified as sensitive.

It is also important not to forget how social media algorithms job, recommend similar content what the user is currently viewing. In this case, a user might start by viewing educational content with accurate and proven information that weighs the benefits and risks, but end up with other less credible content that either conceals hidden interests or is full-fledged scams.

Regulators react

For these reasons, regulators pay particular attention to this content. In Spain, Rodrigo Buenaventura, president of the Spanish financial market regulator, CNMV, called on influencers and public figures act responsibly to prevent “investors from falling into offers that could be wrong or even fraudulent.”

CNMV warns against a change in investment methods and the risks of turning it into a “video game”

Montserrat Martínez Parera, vice-president of the organization, has a positive vision of the digital knowledge of young people and their familiarity with social networks: “It is a way for them to get in touch with the world of investment and to ask advice. These new options are certainly useful and interesting. But she also warned against a change in their investment models, against the the risks of turning it into a “video game” and the growing presence of unregulated products, which could become a breeding ground for fraudulent activity.

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