Virginians warned of ‘finfluencers’ on social media

The State Corporation Commission (SCC) warns Virginians who rely on social media for investment advice about “finfluencers.”

Financial influencers, or “finfluencers,” are a growing trend on social media offering advice in investing and discouraging Virginians from seeking advice from brokerage and investment advisory firms.

“Finfluencers,” according to a press release, are celebrities or well known online personalities who use Twitter, YouTube, Tiktok, Facebook and other social media sites to promote investment opportunities or offer financial guidance.

They may or may not have a background in the financial services industry, and sometimes “finfluencers” receive compensation by the business offering the investment opportunity, the social media platform sharing the message or an undisclosed source.

“When it comes to investing, there is no one-size-fits-all approach. Instead, individuals should consider whether an investment fits their particular needs,” Ron Thomas, State Corporation Commission’s Director of Division of Securities and Retail Franchising, said in a press release. He encourages Virginians to review financial opportunities on social media carefully and investigate them thoroughly. “Understand the risks and benefits of any investment and never invest more than you can afford to lose.”

Strict rules regulate the financial services industry regarding statements concerning an investment’s performance and disclosures regarding compensation and potential conflicts of interest. Investment promoters typically must provide potential investors with all relevant information.

Thomas offers the following tips:

• Consider investment opportunities or advice from finfluencers with caution and independently conduct your own due diligence before investing or taking advice.
• Be wary of content on social media or elsewhere promoting investment opportunities with big or guaranteed returns with little or no risk. If it sounds too good to be true, it probably is.
• As part of your due diligence, independently verify who is offering an investment and the details of any offers. Keep in mind that individuals offering investments are obligated to disclose all material facts regarding an investment, and they must disclose the risks associated with each product.

In Virginia, contact the Division at 804-371-9051 or toll-free at 1-800-552-7945, or email [email protected], to ensure the registration of a financial advisor.