Finfluencers Make Money Even When You Lose

A recent study revealed that a mere 2.2% of finfluencers surveyed held any verifiable financial qualifications, but their work has already gathered more than 692 million views. That's an attention-grabbing statistic, but it's not the one I think investors should focus on. More importantly, content labeled as deceptive averaged 555,547 views, compared with 326,170 for other videos. Thus, the false material received around 70% greater attention. That tells us something much more useful than the claim that “there are too many unqualified people talking about money online." It tells us what the system is rewarding us for qualified people talking about money online. It tells us what the system is rewarding.

Financial-licensing consultancy Legalaes reviewed more than 1,700 English-language posts across YouTube, TikTok, Instagram, and Facebook and classified 29% of the content as misleading. Around 42% of the YouTube videos examined fell into that category. You can look at those numbers and conclude that qualifications matter, and of course they do to a point, but I would be careful about reducing the issue to licensed versus unlicensed. I have spent more than 35 years around markets and have seen plenty of highly qualified people make terrible investment decisions. Credentials do not eliminate poor judgment. The more profound issue is that the people producing online financial content and the people acting on it are often operating under completely different incentives.