Regulation Challenges Arise as Finfluencers Influence Young Investors

As social media continues to evolve, it has given rise to a new phenomenon: finfluencers—individuals who provide investment advice to their substantial online followings. This trend, particularly among younger demographics, has prompted significant concern among regulators and financial institutions over the reliability of such advice. According to a report by Barclays published in June 2023, approximately 40% of young people now turn to finfluencers for investment guidance, with TikTok emerging as the preferred platform for Generation Z investors.

The increasing popularity of finfluencers poses serious questions regarding the quality of financial advice being disseminated. A recent study conducted by the Swiss Finance Institute, released in March 2025, found that a majority of finfluencers exhibit a lack of competence, with 56% classified as "anti-skilled," meaning their investment recommendations led to negative returns. Only 28% were deemed "skilled" in generating positive investment outcomes. Researchers noted that the anti-skilled and unskilled influencers tend to attract larger followings and generate more engagement than their more competent counterparts.

Rachel Blake, a Labour MP for the City of London and Westminster, who serves on the House of Commons Treasury Committee, expressed her concerns regarding the risks associated with unregulated financial advice. She stated, "There's a risk for consumers in terms of understanding the quality of the advice. If you're getting financial advice from a bank or a financial adviser, you will have some confidence that they've been regulated. But if it's from an influencer, it's harder to tell."

In the U.K., the Financial Conduct Authority (FCA) is tasked with regulating financial advice. However, the rapid proliferation of finfluencers has left the FCA struggling to keep pace. In an effort to combat the issue, the FCA recently conducted an international "week of action" involving collaboration with regulators from five other countries to protect social media users from unauthorized financial promotions. However, the FCA’s ability to enforce regulations is limited, relying heavily on Big Tech companies to remove misleading content. According to FCA officials, requests to take down posts can take up to six weeks, allowing potentially harmful content to circulate widely during that period.

Beth Harris, head of financial crime at the FCA, criticized tech companies for their slow responses, stating, "It’s very disappointing. We would really like tech companies to do more. If we can see this content, they can see it too. They should be policing this."

The issue of accountability becomes more complicated when considering the international nature of social media. Many finfluencers operate globally, which creates jurisdictional challenges for regulators. Jonathan Frost, a director at BioWatch and a former officer with the City of London Police, emphasized the need for tech platforms to take responsibility for monitoring content on their sites. He stated, "The platforms themselves should be policing this issue. Arguably, they're in the privileged position of having the data to do so. Enforcement should be a last resort."

Despite the challenges, some regulators have had limited success in addressing the issue. Celebrity finfluencer Kim Kardashian faced a $1.26 million fine from the U.S. Securities and Exchange Commission in 2022 for promoting a cryptocurrency without disclosing her payment for the promotion. In the U.K., the FCA has charged several reality TV stars for similar violations and has launched investigations into finfluencers’ activities.

The rise of finfluencers highlights a broader issue within the financial services industry: the so-called "advice gap." With traditional financial institutions struggling to connect with younger audiences, many individuals are turning to influencers for guidance. Jayne Opperman, CEO of consumer relationships at Lloyds Banking Group, noted, "Customers do want advice. They do want guidance. We know that a lot of our customers turn to social media and influencers who are motivated to get them to invest in dubious products and services, and then we have to deal with the consequences of that."

As the trend continues to gain traction, it remains to be seen how regulators will adapt their strategies to safeguard consumers from unreliable financial advice in the digital age. The urgency for a collaborative approach between regulatory bodies and tech companies is clear, as the influence of finfluencers on investment decisions shows no signs of waning. Moving forward, the financial services sector must work to bridge the advice gap and ensure that consumers can access reliable, regulated financial guidance.