The rise of finfluencers and the risk in TikTok financial advice
Your writer was at his wits’ end about what to blurb about today, so he did what many content creators do when faced with this challenge: he embarked on a deep dive through his email inbox. As luck would have it, this search unearthed some financial advice-focused research conducted for an FAnews Magazine write-up late last year.
Interrogating the advice experts
In a series of Q&A emails, your writer interrogated a respected personal finance journalist and two Certified Financial Planner (CFP®) professionals for their views on the growing cohort of financial influencers, also called finfluencers, who peddle often questionable financial advice on popular social media platforms.
The term ‘finfluencer’ is a portmanteau of the words ‘financial’ and ‘influencer’. It describes individuals who dispense financial content to large social media followings. These personalities are active on platforms like Facebook, Instagram, TikTok, YouTube, and even X, and often command audiences that financial advisers and planners can only dream of.
Finfluencers range from earnest educators with some grasp of financial basics to professional advisers who are licensed and accredited, but use social media as an outreach tool. Terence Tobin, CFP®, says the good side of finfluencer content is that it often brings financial concepts to audiences in multiple languages, making it accessible and relatable.
Dangerously misinformed
At the far end of the finfluencer spectrum, you will find those who are dangerously misinformed or even knowingly misleading. These are individuals with no formal financial training, no oversight, and no understanding of the regulatory implications of giving financial advice. To go ‘all in’ on a finfluencer’s ‘say so’ is risky for a multitude of reasons, not least of which is that the advice they give may not align with your needs.
Tobin warns of significant potential damage if individuals follow unverified or outright misleading advice. “I recently came across someone who told their followers not to draft a will because without a will, they believed there would be no estate and therefore no taxes … that is 100% incorrect,” he says. To avoid this risk, consumers should always cross-check what they hear on social media with a licensed and accredited financial adviser.
Kobus Kleyn, another respected CFP ®, warns that even globally renowned personalities like Tony Robbins or Robert Kiyosaki can pose a threat when their advice is oversimplified, fear-based, or tailored for different regulatory contexts.
“South African financial decisions are complex and often carry significant tax implications,” says Kleyn. “It is one thing to be motivated by Robbins’ positive mindset approach; it is quite another to base your investment strategy on it,” he says. He is equally scathing of celebrity finfluencers who promote high-risk or illegal investment schemes, likening some content to ‘financial clickbait’ designed to exploit vulnerable audiences.
Maya Fisher-French, a well-known financial consumer journalist, categorises finfluencers into three groups: celebrity influencers who delve into finance for sponsorship deals; self-styled money coaches who may lack qualifications; and professional advisers who engage responsibly.
She stresses the need for consumers to do their homework: “It is fine to follow someone who helps you stay motivated about budgeting or saving; but when it comes to investment advice, you have to tread carefully. You must check whether the person is being paid for the content, and whether they are licensed to give advice under the FAIS Act.”
Can the regulator solve for fin-fluence?
South Africa’s Financial Sector Conduct Authority (FSCA) is aware of the growing finfluencer problem. In its 2023/24 Regulatory Actions Report, the authority concedes that “individuals with a significant following on social media platforms have been shown to wield significant influence over consumer behaviour through social media content.” They also hint at divergent finfluencer outcomes.
On the one hand, “finfluencers have played a positive role in enhancing the financial literacy of the public, contributing to increased financial customer participation in financial markets.” On the other, there are growing concerns that the financial decision making is being influenced by celebrities on social media rather than by the recommendations of authorised financial advisers. “We have seen evidence of finfluencers conveying misinformation, and perpetuating scams through social media; this presents a clear risk to the public,” they write.
The FSCA says it will closely monitor the impact of finfluencers and, where required, take action to safeguard financial customers from potential harm. Unfortunately, their hands may be tied. Unlike licensed financial advisers, most finfluencers are not subject to South Africa’s financial sector regulation. The conduct authority does not license finfluencers, nor can it exert jurisdiction over the digital platforms they use, particularly when content is general in nature and not explicitly linked to regulated products.
Another regulatory conundrum
The conduct authority is working on a draft conduct standard on financial education, designed to ensure that when financial institutions conduct educational activities, those activities are fair, balanced, and not misleading. The standard includes expectations around appropriate disclosures, especially where there is a risk that consumers will confuse education with marketing. Alas, finfluencers are not financial institutions, and most will not fall within the FSCA’s supervisory net.
The fine line between financial education and financial advice is easy to cross, especially when a content creator offers ‘tips’ about specific investment instruments, strategies, or product providers. Some finfluencers blur the lines further by monetising their content via affiliate links or sponsored partnerships. In these cases, they may rely on the product provider to comply with financial sector regulation; but all too often, they are pushing unsuspecting listeners deep into the unregulated product universe, where sketchy outcomes are commonplace.
Many financial advice professionals are grappling with the dilemma of whether to ignore finfluencers, or join their ranks. Kleyn believes there are opportunities for advisers to step into the role of credible finfluencers themselves. “A qualified financial professional with a social media presence offers the best of both worlds: regulated advice and accessible communication,” he says.
Call for credible finfluencers
This is echoed by Fisher-French, who notes that social media should be treated like any other media platform. “It allows for higher engagement and feedback, which is great for financial literacy; but the line between advice and education must not be crossed,” she says.
There is an untapped opportunity for the FSCA to engage with the more credible end of the finfluencer spectrum. Perhaps a certification model or partnership framework could be introduced to empower and align well-meaning content creators with regulatory requirements, while flagging those who pose a risk.
Just as the FSCA has worked to raise advice and product standards through the Treating Customers Fairly (TCF) framework, it might be time to apply similar principles-based thinking to the digital landscape. In the meantime, consumers must remain vigilant.
Finfluencer content should never replace professional advice. If a creator is not licensed, not transparent about their incentives, or offering specific recommendations without understanding your personal circumstances, your best defence is to walk away. Always follow the age-old investment adage: if something sounds too good to be true, it usually is.
Banking on accountability
Financial professionals who feel drowned out by flashier voices online should consider stepping into the ring. Armed with ethics, experience, and regulation, you can offer your listenership something the run-of-the-mill finfluencer cannot: accountability.
The rise of the finfluencer poses challenges and opportunities for financial services regulators. Can regulatory tools, such as the draft financial education conduct standard, be tweaked to address this fast-moving frontier? Your writer does not believe so. A better option would be to publish guidelines and suggestions against which finfluencers might benchmark their work.
The call for credible voices in financial advice has never been louder. And there is no better way for the advising community to bring finfluencers in line than by countering the trend with their own blend of compliant and engaging online content. Until such time, let the viewer beware.
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