Despite their reputation – for vapid content, superficiality and a lack of real talent – influencers can offer something useful. Simple tips like cheap recipes and hair tutorials can make helpful differences to people’s lives. But this is every-day, low-stakes advice: there are few risks involved. When the stakes are higher, however, the unregulated world of social media can become dangerous. Influencers speak with unqualified authority on everything from medical advice to politics – and the consequences can be serious.
Few online creators wield this power more than “finfluencers”: influencers who give financial advice on everything from basic budgeting to pensions and mortgages. On TikTok, hashtags such as #makemoney, #investment and #millionaire yield millions of posts; on Instagram, #finance alone pulls up more than 20 million results. While some of this content provides basic if not obvious advice (such as never spending more than a third of your salary on rent), many finfluencers have gained millions of followers by pitching get-rich-quick schemes to desperate audiences. They might recommend crypto and other high-risk investment “opportunities” that promise to catapult their followers into enormous wealth. Such finfluencers are often paid by corporations to advertise risky financial services as sponsored content on their feeds, and even offer expensive “courses” and “recruitment drives” which promise to rescue members from financial worries.
For the last few years, finfluencers have operated in an effective wild west, being under-scrutinised and barely regulated while promoting damaging advice and blatant scams. However, as of last week, the Financial Conduct Authority (FCA) has started to clamp down on finfluencers who may be pushing financial services and products illegally, interviewing 20 under caution. Repercussions can range from steep fines to prison sentences of up to two years.
These interventions are part of a wider crackdown by the FCA, which has charged a host of ex-reality stars with promoting an unauthorised foreign exchange trading scheme on Instagram. Illegal content the regulator is seeking to prosecute includes promoting services such as credit lending and debt solutions, as well as contracts for difference (CFD) trading, an extremely high-risk bet on the price of an asset (like a foreign currency).
Such scrutiny has been a long time coming. But many may fail to sympathise with the victims of any illegal scams: those who would put their savings, homes and livelihoods at risk for at the advice of a stranger on TikTok. And yet it’s clear why finfluencers have begun to thrive since 2020. Their core audience of under-40s are undergoing an acute period of dwindling career and financial prospects in the wake of a cost-of-living crisis (and a global recession), while the upper end of that age bracket are starting to contend with the realities of meagre pensions, limited savings and shrinking home-ownership opportunities, especially when compared with the circumstances of their parents’ generation at the same age.
The rise of finfluencers becomes even more apparent when you look at the rest of the financial support offered to millennials and Gen-Z today. Most traditional financial help targets the section of young people with high salaries or family money (advice on mortgages, investments and ISAs may help this demographic, but does little for a 35-year-old who’s never made more than £28k). Savings and pension guidance from traditional sources is outdated, speaking to a financial reality that hasn’t meaningfully existed this century. There may be some trusted, vetted sources out there – such as Money Saving Experts’ Martin Lewis – but they can’t solve the structural issues facing younger generations, nor can they deliver the false promise of overnight results. Here, finfluencers step in to spin money-making opportunities, which sound far more alluring – even if they don’t actually exist.
The intervention from the FCA highlights a long-standing truth about influencing: that, rather than the stereotype of glossy and shallow – mindless but essentially harmless – lifestyle content, it is a mixed bag of the banal and the very bad. Such content thrives thanks to a lack of regulation. Many of the finfluencers who have been targeted by the FCA are household names to young people on social media, and could be pushing potentially fraudulent products while posing on red carpets. We are letting young people down by failing to make it clear that bad advice and harmful content exists all over social media – not just in the dark, hidden corners of the internet.
[See also: The cowardice of the Washington Post]
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