Earlier this month, the North American Securities Administrators Association (NASAA) issued an advisory cautioning the public on the rise of “Finfluencers.”
NASAA is the association that represents state and provincial financial regulators. It also lobbies on behalf of state authority over securities and providers.
Finfluencers are described as “social media financial influencers.” Perhaps the best example is during the time of initial coin offerings (ICOs), when you would have completely unqualified individuals pumping crypto assets without any expertise in the matter. What they did have was a large social media presence and a percentage of followers willing to ignore common sense and believe in what these individuals were promoting. At times these individuals were paid for their promotion without disclosing the compensation – something financial regulatory frown upon.
NASAA effectively warns the public that posts on social media and videos can be misleading and are “often stylized to be entertaining.” These Finfluencers “cultural status” may lead you astray in making a bad decision.
Current NASAA President Melanie Senter Lubin, commented:
“Investors should keep in mind that Finfluencers are not subject to the same regulations as licensed financial professionals and may have undisclosed conflicts of interest. Before you consider investing or acting on advice from a social media personality, make sure you understand all the ins and outs of the investment including all potential risks.”
Lubin said that the bottom line is before you make a decision about investing your money you should ask yourself whether you understand the risk. Are you able and willing to lose all of your money?
“…before you invest check on the registration status of the person and the investment with your jurisdiction’s securities regulator,” said Lubin.
The advisory is available here.