Social media can be a valuable source of information. However, you should never blindly trust finfluencers.
The risks at a glance
Lack of expert knowledge:
Many finfluencers do not possess the necessary financial knowledge.
Creating needs:
You are told that you need certain luxury goods to be happy. There is a deliberate blending of information and emotions.
Intransparency about remuneration:
Finfluencers frequently fail to disclose that they are paid for their recommendations.
Large losses:
Some of the financial products and strategies advertised like CFDs, crypto-assets or copytrading are extremely risky, and may lead to a total loss.
Tips for dealing with finfluencers
Question how serious they are!
Before you follow tips given by a finfluencer, check who is behind the recommendations. Does the person list relevant education and experience in financial matters on their website?
Check their financial interests!
Does the finfluencer profit financially from their recommendations, for example by way of affiliate marketing? Such recommendations generally tend not to be objective.
Look at the number of followers critically!
As impressive as many likes and a large number of follower might appear, they can be very easily manipulated.
Beware of fraud methods!
Finfluencers inviting you to contact them using private messaging services or personal messages, frequently have questionable intentions. Caution in in particular urged regarding investments in CFDs or crypto-assets.
Beware of promises of large profits!
Get rich quick recommendations are usually dubious and associated with high risks.
Do your homework on workshops and coaching sessions!
Before you take part in a workshop or coaching session with a participation fee, inform yourself about the finfluencer’s qualifications and experience. Many such events are useless, and frequently spread incorrect information.
Make sure you obtain independent information!
Never rely exclusively on a finfluencer’s recommendation. Consult various independent sources to obtain a full picture before you make an investment decision.
Remain critical! This is the only way to be able to differentiate between valuable sources of information and dubious offers and players.
Study on »Praxischeck Finfluencer:innen« (in German only)
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Finfluencer:
A word creating by blending “financial” and “influencer”. Persons sharing financial content on social media channels with a large number of followers.
Affiliate marketing:
A commission-based system, where companies pay finfluencers money for successfully brokering products or services using special links or codes.
CFDs:
Investors speculate on changes in value of underlying assets using Contracts for Difference (CFDs) without owning them. Caution, they are exceptionally high-risk!
Copy trading:
Investors automatically copy other traders’ trades.
Other editions:
A to Z of Finance:
You can find further details on the A to Z of Finance section of our website.