Presented by the CFA Institute

Golden tips before listening to “financial influencers” on social media

The CFA Institute, a global association of investment experts, has provided five tips to focus on when listening to content from “financial influencers” on social media.

The Institute reported in its study that financial influencers have a great ability to have a broad impact on financial trends by discussing financial matters on the social media platforms that dominate the current era.

She pointed out that, in light of the digital transformation taking place in the region, these influencers play an important role in guiding the millennial and post-millennial generation, by sharing basic investment concepts, cryptocurrency analyzes and promotional offers, in addition to enhancing financial knowledge.

The study showed that with about 27% of financial influencers owning sponsors, a set of questions come to mind about the extent of sponsors’ influence on the financial decision-making process and the reliability of information.

The study reviewed five main considerations that must be focused on to build financial knowledge based on analytics, attributing these “considerations” to the founder of the “Bintcoin” channel, winner of the Most Outstanding Influencer in the Cryptocurrency Award from Gulf Business magazine for the year 2023, Nagham Hassan.

The “key considerations” were the following:

1. Conduct your own research:

Before putting your money into investments, you should devote some time to researching the market, while neglecting this could lead to major consequences, which emphasizes the necessity of relying on sufficient research and knowledge foundations when making investment decisions.

Here, one should not rely on only one source when making such decisions, especially in light of the spread of misleading information, especially on social media platforms.

It is also important to always verify information and not take any investment step based on the advice of friends, family, or your favorite influencer, which is embodied in the saying: “Always do your own research.”

2. Fear of missing opportunities and emotions:

Don't let emotions influence your financial decisions. Many financial influencers rely on algorithms and focus on feelings of fear, uncertainty, and doubt when marketing their content.

Therefore, most of the visuals presented by financial influencers revolve around these elements, which promotes the spread of their content more quickly.

Focusing on people's emotions is a common strategy used by financial influencers.

A large percentage of the content revolves around encouraging viewers to take immediate action, which creates a sense of fear of missing out on rare opportunities.

Here there is no reason for these fears, because the market always holds many opportunities, which emphasizes the importance of not allowing feelings of fear to control the decision-making process, in addition to the necessity of focusing on analyses.

3. Be wary of the motives of financial influencers:

Many people are now turning to working as “financial influencers” to ensure a basic source of income.

“Financial influencers” obtain income in two main ways. The first is through revenue from video clips and subscriptions, while the second method comes through sponsors and promotions, where influencers receive financial compensation in order to promote specific products or services.

This dual income may exacerbate concerns about the “authenticity of content” provided by financial influencers, as well as increasing doubt about the authenticity of content that may be motivated by financial incentives.

People should always be wary of the content of financial influencers who may promote or encourage certain investments or financial products for personal gain, far from impartiality and transparency.

This emphasizes the importance of focusing on knowing the possible motives behind any financial advice when wanting to make correct decisions, as information from different sources must be evaluated before making any financial choice.

4. Lack of certainty about the future:

The dynamic world of investment markets is not devoid of volatility, manipulation, logic, and other unexpected events.

Therefore, it is difficult for even the most experienced experts to confirm market movements, which naturally makes all types of content provided by “financial influencers” based on speculation.

These forecasts arise from many sources, including historical data or charts, macroeconomic complexities, and geopolitical conditions.

Accordingly, we must take into account that financial influencers deal with ambiguous scenarios in order to present their assumptions based on their personal analysis.

While their analysis may sometimes align with market trends, the inherent risk of miscalculation is always present.

Therefore, it is wise to interpret these estimates with some caution, especially in light of the uncertainty of the future.

5. Beware of scams and fake files:

Be careful with fraudulent accounts, offers, and “deep fakes.”

Following financial influencers on social media platforms is common, but some questions may arise when the financial influencer follows you as well, and then starts unwanted conversations offering financial services.

Therefore, be wary of invitations to click on any “links,” share personal information, or send money.

In such cases, make sure that you are dealing with a fake account impersonating a real influencer, and avoid sending any money to those who promise quick returns and unrealistic dreams.

This recommendation can protect you from potential financial harm at no cost, although it is not direct financial advice.

The huge rise in fake accounts, phishing and deepfakes also highlights the need to be extremely vigilant.

Therefore, we recommend that you be careful when browsing in the digital world to avoid falling victim to any suspicious practices.

The appeal of quick, entertaining videos from financial influencers for those seeking to enhance their financial expertise may overshadow the time spent studying the market, as individuals tend to adopt easy and short solutions, driven by the nature of our current world of short and interactive content.

However, it is necessary to realize that obtaining financial expertise requires a degree of commitment and time, and is not limited to following quick content without delving into research and study.

Acquiring this vast wealth of financial knowledge also requires devoting sufficient time to experimenting with various strategies and learning from the inevitable mistakes. True financial expertise is not created by choosing easy solutions, but rather by allocating the required time to research and learning, and benefiting from valuable lessons from practical experiences.

CFA Institute

It is noteworthy that the CFA Institute is a global association of investment experts that sets standards of excellence and professional accreditation, encourages ethical behavior in investment markets, and is considered a reliable source of knowledge in the global financial community.

There are about 200,000 CFA holders in 160 markets worldwide.

The Institute's portfolio also includes 10 offices around the world and 160 local associations.