CFA Institute targets questionable advice from finfluencers

By Jonathan Got | January 26, 2024 | Last updated on January 29, 2024
3 min read

Only 20% of finfluencer content containing investment recommendations has disclosures of any kind, a study by New York-based CFA Institute finds.

The institute issued policy recommendations Thursday regarding regulating finfluencers — financial influencers who share investment tips and strategies on social media — after also finding the disclosure rate for content including an affiliate link was 27% and for promotional content was 53%.

The CFA Institute’s report, which analyzed finfluencer posts from around the world, found that Gen Z investors took advice from finfluencers because cost was a major barrier to accessing a professional financial advisor. Many also said they distrusted professional advisors because they think advisors recommend products to receive a commission and do not act in the investor’s best interest.

For their part, financial firms hire finfluencers to reach investors aged 18 to 25 with engaging and relatable content, but low barriers of entry can also increase exposure to poor advice, the CFA Institute said.

In Canada, “the majority of people, I would say the lion’s share of finfluencers, are unregulated,” said Samuel Lichtman, founder of London, Ont.-based Millen Wealth Advisors.

Lichtman, who is registered as a mutual fund dealing representative and has compliance approval to post on social media, has more than 90,000 followers across Instagram, Facebook, TikTok, LinkedIn and Twitter. Many unregulated finfluencers are either sharing their personal journey or selling some sort of educational product, he added.

Recommendations for regulators and firms

The report said regulators should educate finfluencers on regulatory disclosures required for certain activities. To enforce the rules, regulators could create public reports on complaints about finfluencers and issue warnings on repeat violators.

However, Canadian regulators don’t necessarily have the capacity to enforce rules against regulated individuals, Lichtman said.

For example, some life insurance agents have posted on social media suggesting to put all of one’s free cash flow into a whole life insurance policy, implying the strategy can work regardless of personal circumstances and without disclosing that they stand to gain a substantial commission.

“There is so much garbage out there,” Lichtman said. “There needs to be the threat of enforcement for people who start pitching these products with no advice surrounding them and no conflict-of-interest disclosures. I think that’s a huge issue.”

Last year, the U.K.’s Financial Conduct Authority proposed new guidance on the industry’s use of social media and the European Securities and Markets Authority started a consultation process on potential regulatory reforms on the use of social media, finfluencers and gamification techniques.

As for investment firms, the CFA Institute recommended they should take compliance responsibility for their finfluencer activity. Before hiring a finfluencer, firms should find out which regulators have oversight on finfluencing activity and whether potential rewards outweigh possible compliance costs and regulatory and financial risks.

Before posting, firms should require all content to undergo a compliance review. Finfluencers should also be trained to make necessary disclosures and not market complex products to unsophisticated investors.

Tips for investors

The institute identified five things to enhance young investors’ ability to evaluate finfluencers’ information critically. Gen Z investors should understand finfluencers’ financial motivations, verify their professional qualifications, check for disclosures of conflicts of interest, examine the gains and losses of finfluencers’ portfolios when possible and see if the information is consistent with other sources.

In addition, investors should be wary of an individual’s designation and disciplinary history, Lichtman said. Some finfluencers who are only licensed to sell insurance might masquerade as full-service financial advisors while others may represent firms that have a history of regulatory noncompliance.

The report added that social media platforms should enhance controls by requiring content creators to clearly disclose advertising. YouTube already prompts creators to make disclosures, and more platforms should adopt this approach, the CFA Institute said. Platforms could use artificial intelligence to detect advertising and check if disclosures are adequate.

“Young financial professionals starting out need to be on social media, if nothing else, to combat the amount of horrible advice that’s on there from unregulated individuals,” Lichtman said. “If we just let the space be overrun by unlicensed, unregulated individuals, I think the consumer is worse off.”

The CFA Institute made its recommendations after conducting focus groups with young investors and reviewing 110 pieces of online finfluencer content from the U.S., the U.K., France, Germany and the Netherlands. Content that included an investment promotion or recommendation represented 65% of what the institute analyzed, with the rest being general guidance.

Jonathan Got headshot

Jonathan Got

Jonathan Got is a reporter with and its sister publication, Investment Executive. Reach him at