In today’s digital age, it’s not uncommon for individuals to turn to social media influencers for advice on various topics, including investments. Many of these influencers offer engaging content and a sense of community. While some have the required expertise and a genuine desire to help, this is not always the case. In this article we’ll be looking at some of the key issues associated with taking investment advice from online influencers and how to navigate them.
The first thing to keep in mind when taking financial or investments advice from online influencers is their qualifications. Some of them do not have the formal education and certifications required. That said, working out who is or is not qualified is straightforward. All you need to do is look for relevant professional certifications such as CFA, CFP, or similar credentials.
It’s also important to diversify your sources of information. Consult multiple sources, including licensed financial advisors, reputable financial news outlets, and official financial institutions. Remember that even if they do not have the professional background, online influencers could still have good ideas or suggestions about investments that make sense for you. The important thing is to understand who is giving you advice and to check this to make sure its genuine and appropriate for your circumstances.
Another issue to consider when it comes to investment advice from online influencers is ethical standards. Unlike licensed financial advisors, influencers are not held to the same ethical and professional standards, so it really does depend on the ethics of the individual influencer. It is important to note that if an influencer’s advice leads to financial loss, they are not legally accountable for the consequences.
The question of ethics also covers the topic of product placement or the promotion of specific investments. Some influencers do this against payment from the product provider which can lead to biased recommendations. An ethical influencer will make it clear when they are speaking about an investment which they are promoting against a fee and include appropriate disclaimers in their content. This can help you identify the more ethical influencers. A professional financial advisor, who knows your specific circumstances, would also be able to help you filter through all the information available to come to a decision.
A final point on this topic is a more general one related to social media. As many of us are aware, social media platforms run on algorithms which identify they type of content we engage with and give us more of the same. This tends to create eco chambers where one particular idea or viewpoint appears to the user to be universally accepted. While influencers themselves may be acting ethically, this aspect of social media can still result in market bubbles and increased volatility.
At the end of the day, online influencers can be a great source of investment ideas and advice. But, it’s your money that is being invested so before you take a decision always do your own research to see if what you’ve been told really reflects both the risks and the potential rewards of an investment.
Remember that investing always involves risks, including the potential loss of capital. Make sure you understand these risks before following any advice. For personalised investment advice, consult a licensed financial advisor who can provide recommendations based on your individual financial situation and goals.
By being aware of the benefits and pitfalls associated with following online influencers, you can make more informed investment decisions and protect your financial wellbeing
MeDirect Bank (Malta) plc, company registration number C34125, is regulated by the Malta Financial Services Authority and is licensed to undertake the business of investment services under the Investment Services Act (Cap. 370).
MeDirect Bank (Malta) plc, The Centre, Tigné Point, Sliema, TPO 0001, Malta.
