Before you follow “finfluencers”: How to spot red flags in financial content online

What are finfluencers? 

Financial influencers, or "finfluencers," are content creators who discuss financial topics such as saving, investing, and budgeting on social media platforms like TikTok, Facebook, Instagram, and YouTube. As a popular source of financial information, they often share personal experiences, opinions, and recommendations in simple and engaging formats. 

While finfluencers make financial information more accessible, they are similar to columnists or opinion writers who share their own views. They may or may not be licensed, and may create content as part of paid partnerships.  

You should therefore take finfluencer content as general information and consider whether it suits your own financial situation.  

What to know before following finfluencer opinions 

Following finfluencer opinions without careful consideration can put your financial wellbeing at risk. Here’s what you need to know about the potential dangers:  

Lack of competence

• Many finfluencers are not licensed or qualified to give financial advice. Unlike regulated financial advisors who must meet strict competency requirements and ongoing training standards, finfluencers may lack the deep knowledge to give a full and balanced picture.  

• For example, a lifestyle influencer promoting a particular investment strategy may not fully understand the risks involved, and whether it’s suitable for financial situations such as yours. 

• That said, being unlicensed does not mean the finfluencer’s content should be dismissed. Their content may still be useful for general awareness.  

• The key is to consider the context, limitations, and whether it fits your own situation, before making any financial decision.  

Undisclosed conflicts of interest 

• Some finfluencers are paid to promote specific products or platforms, or earn commissions for referrals, so their recommendations may not be in your best interest. You might end up choosing a product or platform with higher fees, unsuitable features, or unnecessary risks simply because it pays the influencer better.  

• Without transparent disclosure about how they’re compensated, you can’t properly evaluate whether their content is genuinely in your best interest. 

Herd mentality risks

Social media amplifies herd mentality. When popular finfluencers make exciting claims about a “can’t miss” investment opportunity or urges followers to “buy the dip”, you may feel pressured to act quickly without doing your own research. 

This rush to follow the crowd can lead to several costly mistakes: 

• Buying high, selling low: Investing when the prices are already inflated due to hype, then panic-selling when the trend reverses. Some investments may also have weak fundamentals and low value in the long-term. 

• Over-concentration: Putting too much money into a single investment or asset class because it’s trending. 

• Ignoring your risk tolerance: Taking on investments that are too risky for your financial situation and goals. 

• Missing the fine print: Failing to understand fees, lock-in periods, or other important terms.  

How to spot red flags in finfluencer content  

When finfluencers create content responsibly, it can help consumers understand complex money concepts. However, not all financial content online is created equal.  

Be cautious if a finfluencer does the following:  

• Promises high returns with low risk: Legitimate investments always carry risk. Be wary of claims of “guaranteed profits” or “foolproof strategies”. 

• Gives unclear or unverifiable information: Be cautious if you cannot find reliable details about the product, platform, or company being promoted. You can check if an entity is regulated by the Monetary Authority of Singapore (MAS) using the Financial Institutions Directory.  

• Uses pressure tactics: Phrases like “limited time” or “don’t miss out” often create a false sense of urgency. They are designed to rush you into making decisions without proper consideration.  

• Does not disclose conflict of interest: A finfluencer might share a referral link or a sign-up promo code for a financial product but not mention that they earn commission from the people who sign up. This might make the content seem more neutral than it truly is, so it’s important to consider what a finfluencer stands to gain from sharing such information. 

• Presents only one side of the story: Be cautious of finfluencers who do not give a balanced view, such as highlighting potential gains without discussing the risks. 

4 questions to ask before acting on finfluencer content 

Before acting on any finfluencer content, here are 4 questions you can ask yourself: 

1. Is it credible? Is the finfluencer using facts and data that can be verified?  

2. Is it transparent? Do they disclose relevant information such as paid promotions, affiliate partnerships, or sponsorships? 

3. Is it responsible? Is the finfluencer saying things in an objective manner, highlighting both the risk and returns, and encouraging self-research, or are they baiting for clicks and creating urgency? 

4. Is it relevant to me? Does this information fit my current financial situation, goals, and risk tolerance? Remember, there’s no one-size-fits-all investment strategy.  

Always do your own research. Cross-reference finfluencer information with reputable sources and take your time before making any financial decisions. Lastly, get independent professional advice when needed.  

Making the most of finfluencer content 

Responsible finfluencers can be valuable allies in your financial journey, breaking down complex financial concepts into digestible information. Remember to consume online content wisely.

 A note for content creators 

If you are creating financial content online, it’s important to understand your responsibilities, including whether your activities may require a license from MAS. MAS and the Advertising Standards Authority of Singapore (ASAS) have developed guidelines for sharing financial information responsibly.  

Key considerations include ensuring your content is accurate and balanced, being transparent about any compensation you receive, and always encouraging your followers to do their own research or consult professional advice when appropriate.  

Remember that your content can significantly impact your followers’ financial decisions.