Explainer – What should I do before acting on financial advice from finfluencers on social media?

A boy listening to financial advice

Social media is awash with financial advice. From investment tips to cryptocurrency recommendations, finfluencers – or financial influencers – can make certain products and services sound exciting and appealing.

When we asked members of the public if they would take financial advice from someone on social media, we found that many people tend to take a cautious approach. 

[Speaker 1] Not really, unless I know that they're, someone you can trust outside of that. But I wouldn't take it just automatically from social media without checking them out first.

[Speaker 2] Not really. No, no, no, I wouldn't have any faith in that now. There's just so many fake things that I wouldn't be able to discern it, so I wouldn't do it.

[Speaker 3] Absolutely not. No way. I wouldn’t entertain it. I’m too old.

[Speaker 4] I don't think I would. I think I'd rather go in person. Or maybe on a zoom session. I probably would, something like that. But not just, you know, not just on Facebook or Instagram.

[Speaker 5] Under no circumstances.

[Speaker 6] No, I think a lot of it is fake anyways, so it's not really worth it.

[Speaker 7] No. Because it's an unknown person.

[Speaker 8] No, no, because I don't really be on social media. But if I was, no. 

[Speaker 9] No.It’d have to be somewhere I’d know, like, or you know, trust or, you know.

[Speaker 10] Just, I have an accountant for that. Simple as.

[Speaker 11] I don't think so, I think because social media is really unrealistic, sometimes. And I think, you should just go from the advice from the people around you, people that know you.

[Speaker 12] I dunno, just like, sure, my parents know, well, not that they know it all, but like, I'm just like, I get my advice from them and I trust them. So that's it really for me.

[Speaker 13] No.

[Speaker 14] No, absolutely.

How come?

Because I don't I can't identify who it is or if someone on social media is selling a product. So, you know, I would just, no.

Nonetheless, it can be tempting to jump straight in when you see a potential financial opportunity on social media. 

Before you make financial decisions based on advice or content from a finfluencer, here are some important things to consider.

Is the advice right for you?

A post about investing might be interesting to read, but remember: the person posting doesn't know you, your financial situation, or your goals. Any recommendation they give is not tailored to your personal circumstances. What works for them may not work for you.

Has the finfluencer been paid?

It's not always obvious if a finfluencer has been paid or given an incentive to promote a certain financial service or product. Before taking their advice, think about whether they might have a financial interest in promoting what they're recommending.

Be wary of risky investments

Posts about crypto, derivatives, and forex may sound like exciting investment opportunities. But these can be very risky and are not suitable for everyone. If something sounds too good to be true, it probably is.  It’s important to do your own research before you make any financial decisions. 

Check if the firm is authorised

Before you invest, check to see whether the firm you are transacting with is authorised by Central Bank of Ireland. You can do this by searching our Registers online, or calling 0818 681 681 or +353 (0)1 224 5800. 

Even if a firm appears to be authorised, you should still make sure it is genuine.  It’s common for scam artists to pretend to be genuine by “cloning” the appearance of an authorised firm and copying information related to that firm. 

If you engage with an unauthorised firm, you lose important protections designed to look after you if things go wrong – including access to compensation schemes like the investor compensation fund.

Need to make a complaint?

If you have a complaint about a financial services provider, you should first discuss it with the firm itself. If you are not satisfied with the firm’s response, you can contact the Financial Services and Pensions Ombudsman (FSPO).

See also:

Making a complaint

More info on making a complaint

Explainer

How finfluencers can protect consumers

Crypto

5 things to know about buying crypto

Financial Scams

Learn to spot common scams and how to protect yourself from them