Social influencers and your finances

Social media influencers are increasingly sharing information about investing. This can be done by ordinary people or by celebrities who have taken an interest in a specific product or investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition.

They are often called “finfluencers” — financial influencers whose media accounts are focused on money and investing.

Social media content creators can reach a wide audience very quickly. An influencer can potentially affect the decisions of thousands or more people through their posts or videos.

Finfluencers might use their social channel to:

• ShareShare A piece of ownership in a company. A share does not give you direct control over the company’s daily operations. But it does let you get a share of profits if the company pays dividends.+ read full definition information about their own investment portfolioPortfolio All the different investments that an individual or organization holds. May include stocks, bonds and mutual funds.+ read full definition
• Recommend what financial product or investment to buy or not buy
• Give advice on how to manage your money
• Wear branded clothing or advertise a financial brand
• Tell you about an investment opportunity hot tipTip The sharing of important information about a company not known to the public.+ read full definition

Sometimes information is shared in a balanced, factual manner. However, anyone can act as a finfluencer without having qualifications or training in the financial sectorSector A part of the economy where businesses provide the same or related products or services. May also refer to a group.+ read full definition. Misinformation can spread just as quickly as facts.

If you come across financial advice from a so-called expert on social media, ask yourself:

1. Are they being paid to endorse a product? Influencers and celebrities may post financial advice or investment recommendations because they are being paid to do so. This doesn’t necessarily make the advice relevant to you or your situation.
2. Are they qualified to give financial advice? Check to see if this person has a financial certification or professional designationDesignation A title that tells you that a person has qualified to work as a financial planner. For example, an advisor may get the Certified Financial Planner (CFP) credential based on their education, experience, exams and ethics.+ read full definition of any kind. If they are registered as a financial advisor or investment dealerInvestment dealer A securities firm that buys and sells a wide range of investments. They are likely a member of the Investment Industry Regulatory Organization of Canada (IIROC).+ read full definition, check their registration to find out if they are in good standing.
3. Are they making big promises? Some influencers may make big promises about investment strategies or stockStock An investment that gives you part ownership or shares in a company. Often provides voting rights in some business decisions.+ read full definition picks, without necessarily showing data to back up the claims. While it’s possible some recommendations may turn out to be valuable, others may end in failure. It’s wise to take such recommendations with a grain of salt and seek a qualified second opinion before acting.
4. Are they an expert or an entertainer? Social media influencers thrive on building a wider audience for their content. As a result, they may use tactics to make their content entertaining and enjoyable to increase their audience. That can mean their advice is for mass consumption and not relevant for individuals planning their finances.
5. What’s the risk to me if this advice goes wrong? A finfluencer might give specific tips about what investments to purchase or how much to investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition, but they may have very different portfolios or budgets than you. The reality is only you know how much you have available to invest. Know your risk tolerance, and don’t invest what you can’t afford to lose.

There’s nothing wrong with consuming social media. Keep in mind that your own financial goals and needs are personal. Advice shared by finfluencers may be popular but that doesn’t necessarily mean it’s right for you.

When considering financial advice, remind yourself of your own financial goals. Seek a qualified second opinion before making a significant financial decision.