Why you should be wary of finfluencers’ financial advice

Don’t you just love a life hack? Well, how about a money hack? If you’ve been trying to figure out how to build wealth and grow your money, you know that sifting through financial books, blogs, and websites to boost your financial knowledge can be hard work. Having a financially savvy guide to help you make money decisions can be a game-changer. Recently, many have been tempted to seek financial advice from social media influencers.

These ‘finfluencers’ dish out advice on debt management, retirement planning, and investment strategies via slickly packaged videos and reels, often promising quick gains and easy success. But how reliable are they and should you trust their advice over that of a financial professional?

The key differences between finfluencers and financial professionals

Finfluencers have clearly caught on. Last year financial content on TikTok (aka #FinTok) increased 373%.¹ But just because social media influencers seem sincere or knowledgeable doesn’t mean you should automatically place your trust in — or give your money to — them. Here are three reasons why working with a financial professional is better for you than listening to a financial influencer. 

1. Financial professionals are held accountable for their actions.

A financial professional may have a number of professional designations, like a certified financial planner (CFP), chartered financial analyst (CFA), certified public accountant (CPA), or chartered life underwriter (CLU), depending on which organization bestowed their certification. They must obtain a license and meet standards of education, testing, and ethics set by professional bodies that regulate conduct.² That means there’s a procedure in place to handle any problems, complaints, or disputes.

Social media financial influencers are not required to have a license or credentials to dish out financial advice, and many lack the experience or qualifications to make them financial specialists.³ Though some influencers may be licensed or fiduciaries, you should still do your homework on who these people are. It’s worth noting that finfluencers are also often wrong, and unlike financial professionals, they can’t be held accountable for their mistakes. It’s been estimated that some 70% of financial advice on social media is misleading.⁴ One study of 29,000 social media financial influencers found that you may actually be better off doing the exact opposite of their recommendations.⁵

2. Financial professionals give personalized service.  

Financial advice should not be one-size-fits-all. The bank balances and debts that you and your family have are unique. So, too, is the path to achieving your short-term and long-term financial goals. A financial professional can not only take all this into account, but also help you refine and clarify your goals as your life circumstances evolve. Their job is not just to give advice but it’s also to listen. It’s through that give and take that a financial professional can best help you. But financial advice on social media is largely a one-way street — no matter how much eye contact they maintain with the camera. 

3. Financial professionals work for you.

Another point to consider: Finfluencers themselves might be collecting a paycheck to tout an investment. Meaning, they make money whether you do or not. Though federal regulations require influencers to clearly label posts for which they are being paid to promote, in the US several celebrities have run afoul of this rule.⁶ 

The bottom line

Chasing trends on social media might work for dance moves or creating memes, but it’s not always a good strategy for making financial decisions. Sure, watching a 30-second clip may get you fired up to finally take control of your finances, but it’s no substitute for the sound, personalized advice from an accredited financial professional.

And you don’t have to worry about being out of the loop on the latest social media financial trends. You can always ask your financial professional if that cool thing you heard about on TikTok is right for you and aligns with your financial goals or level of risk tolerance.