Finfluencers In The Information Age

Millions of retail investors remain underserved by traditional financial advice channels due to high account minimums, excessive fees, poor service, and a lack of trust in the advice being offered. Historically, many turned to their banks for guidance. Unfortunately, bank branch sales personnel—often cynically referred to as "regulated finfluencers"—typically promote only proprietary products, essentially acting as distributors of sponsored content. These products are frequently high-cost, actively-managed mutual funds with embedded sales commissions, creating significant conflicts of interest that regulatory frameworks attempt, but often fail to mitigate.

The investing landscape has shifted dramatically with the growth of self-directed investment accounts, bloggers and the influence of social media platforms such as YouTube, Reddit, and Instagram. According to a 2024 survey by the Canadian Investment Regulatory Organization (CIRO), over half (56%) of Canadian investors now view advice from finfluencers as equally or more valuable than that provided by traditional financial advisors.¹

A "finfluencer" (financial influencer) is a content creator who uses social media to share financial insights, ranging from general financial education to specific investment tips. They frequently present themselves as experienced investors, sharing market commentary, personal stories, and actionable suggestions in a relatable and engaging manner. However, the low barrier to entry has also given rise to unqualified or ill-intentioned individuals, making it essential for consumers to approach this content with caution.

The Regulatory Response

Regulators have consistently warned retail investors against relying on non-registered finfluencers, who may be scammers, unqualified commentators, or promoters of high-risk, high-cost financial products offered simply by paid promoters of expensive, risky products. Regulatory authorities are likely to introduce more specific rules to oversee investment recommendations made through social media channels.

However, registration alone is not a panacea. Even regulated professionals may be subject to incentives that distort their advice, such as compensation structures or sales quotas. Moreover, many registered advisors do not have fiduciary obligations, and history has shown that regulation alone does not eliminate poor outcomes for investors.

Recognizing this shift in investor behaviour, CIRO has proposed allowing discount brokerages to provide non-tailored advice—through tools such as model portfolios, educational materials, calculators, and alerts—without triggering the requirement for full client suitability assessments. Many of these platforms already provide analyst research reports that influence client decisions. The goal is to reduce investor reliance on unregulated, potentially unreliable content by improving access to trustworthy, if generic, advice.

The Educational Value of Quality Finfluencer Content

In contrast to bad actors in the space, some retired advisors, seasoned bloggers and social media individuals have made meaningful contributions by educating financial consumers on topics such as budgeting, tax optimization, and financial planning. While finfluencer content is not personalised and should not be treated as such, it plays an increasingly important role in the broader financial advice ecosystem.

This educational role fits within an established tradition of freely available financial information. Investors already turn to sources such as BNN, Yahoo Finance, The Globe and Mail, and long-standing personal finance blogs like Cut the Crap Investing, My Own Advisor, and Retire Happy. Morningstar ratings, for instance, have long informed investor decisions without requiring registration. Quality finfluencer content extends this democratization of financial knowledge through modern, accessible formats.

Advantages of Finfluencer Content

Accessibility and Relatability

Finfluencers simplify complex financial concepts using plain language, short videos, and real-life examples. Their ability to connect with viewers and present financial information in a digestible manner helps compensate for gaps in formal financial education. This engagement has improved general financial literacy and encouraged investors to take more active control of their finances. Importantly, finfluencers provide free, user-friendly content that makes financial information more approachable, in contrast to traditional advisors who charge fees that deter lower-net-worth investors.

Community and Interaction

Finfluencer communities offer space for discussion, peer learning, and shared experiences. These forums can provide emotional support and foster ongoing interest in personal finance topics, creating an environment where investors feel comfortable asking questions and learning from others' experiences.

Motivation Through Transparency

By sharing their personal journeys—including both successes and mistakes—finfluencers can motivate their audiences to act. The most responsible among them clearly differentiate between opinion, personal anecdote, and evidence-based guidance. This transparency can inspire viewers while maintaining appropriate boundaries around what constitutes advice versus information.

Market Impact

Notably, finfluencers have helped popularize low-cost ETFs—products that many licensed advisors are less eager to promote due to lower commission structures. This advocacy for cost-effective investment options has benefited retail investors who might otherwise be steered toward higher-fee products.

Industry Impact and Pressure for Reform

Finfluencers may indirectly elevate standards across the traditional financial advice industry. Their popularity can pressure regulated firms to improve transparency, modernize sales practices, and extend financial education and advisory services beyond transactional support. This competitive pressure benefits consumers by forcing traditional providers to better justify their value proposition.

There is anecdotal evidence that some consumers have filed successful complaints against firms based on information provided by finfluencers. Common issues include excessive fees, overconcentration, flawed Know-Your-Client (KYC) processes, unsuitable leveraging strategies, erroneous tax advice, and buy recommendations in the presence of high consumer debt.

Risks and Limitations

Regulatory Gaps

Most finfluencers are unregulated. Investors can verify an individual's registration at: https://info.securities-administrators.ca/nrsmobile/nrssearch.aspx. If a finfluencer is not registered, there is typically no recourse through complaint-handling bodies such as the Ombudsman for Banking Services and Investments (OBSI).

Questionable Credentials and Experience

Finfluencers may lack formal financial training or professional designations such as CFP or CFA. Some share advice based on limited personal experience, which may be irrelevant or even harmful in different contexts. Investors should research the influencer's background and intentions before acting on their suggestions.

Hidden Conflicts of Interest

Paid sponsorships may influence content without adequate disclosure. Just as with regulated advisors, it is essential to understand whether someone is being compensated and by whom. Viewers must distinguish between objective recommendations and promotional material.

Oversimplification and Format Limitations

Social media formats may oversimplify nuanced financial topics. While content may be engaging, it cannot substitute for in-depth financial analysis or tailored advice. The bite-sized nature of social media content can lead to an incomplete understanding of complex financial concepts.

Fraud and Misinformation

Some influencers promote questionable or outright fraudulent products. Promises of guaranteed returns or get-rich-quick schemes should raise immediate red flags. Popular but unbalanced narratives—such as "Why I invest in crypto"—can be misleading for risk-averse or income-focused investors who may not appreciate the full risk profile being presented.

Conclusion

While many finfluencers aim to educate and empower, others exploit their reach for financial gain. Before acting on their advice, investors should monitor their content over time, assess their motivations, and verify whether the material aligns with their own financial goals and risk tolerance.

In many cases, finfluencers offer a form of financial education that traditional channels have failed to provide. Some have achieved financial independence themselves, offering proof that self-directed investing can be successful when approached thoughtfully. They are democratizing access to financial information—but this progress comes with trade-offs.

Consumers must engage critically, cross-reference advice with reputable sources, and, when necessary, consult credentialed professionals for tailored guidance. The key is not to avoid finfluencer content entirely, but to consume it as part of a broader financial education strategy while maintaining appropriate scepticism about sources, motivations, and the limitations of-generalized advice.

Further Reading

• IOSCO Final Report on Finfluencers (2023)
• CFA Institute Report: The Finfluencer Appeal (2024)

Ken Kivenko, Peng (retired), President , Kenmar Associates, Etobicoke, ON (416) 244-5803, kenkiv@sympatico.ca,

www.canadianfundwatch.com

 https://www.ciro.ca/sites/default/files/2024-06/2024-Investor-Survey-Report-EN.pdf