New research published by the CFA Institute, the global association of investment professionals, reveals that insufficient financial literacy, limited interaction with regulated financial advisers and a preference for obtaining information through digital platforms, drives Gen Z-ers to engage with finfluencer content.
Rhodri Preece, CFA, Senior Head of Research, CFA Institute said: “Finfluencers now play an increasingly significant role in educating young people about finance, with accessible content that is both informative and engaging. However, our research shows that finfluencer content often lacks sufficient disclosures, which can hinder the ability of consumers to evaluate the objectivity of the information, and some investors may be unaware when and how finfluencers are being paid to promote financial products.”
“We urge regulators to consider a universal definition of an investment recommendation, and firms and social media platforms should work with finfluencers to ensure compliance with applicable policies.”
Across the content reviewed, 45% offered guidance (content that provides general information about investments but does not recommend a particular course of action), 36% included investment promotions (marketing and advertisements of investment products), and 32% included investment recommendations (content that recommends a specific course of action). Just over half (53%) of content containing a promotion included a disclosure, compared with 20% of content containing a recommendation. 27% of content included an affiliate link.
To read the full report and recommendations visit: Finfluencer Appeal: Investing in the Age of Social Media.