When financial advice is only a click away, investors must be wary

SOCIAL media has democratised investing in ways that would have been unimaginable a generation ago. Today, anyone with a smartphone can access market commentary, investment ideas and financial education instantly and at virtually no cost.

But democratisation has a downside: anyone with a smartphone can also become an investment “expert”.

A recent study highlighted by US newspaper Barron’s provides a sobering reminder of the risks.

Financial licensing consultancy Legalaes examined more than 1,700 English-language videos across Facebook, Instagram, TikTok and YouTube and found that only 2.2 per cent of the financial influencers, or “finfluencers”, had demonstrable relevant financial qualifications.

Collectively, the videos had attracted more than 692 million views, but fewer than 12 per cent of them contained disclaimers.

More worrying, 29 per cent of the videos were classified by the researchers as misleading. On YouTube, the proportion was almost 42 per cent.

Perhaps the most disturbing finding was that “misleading material” tended to attract more attention. Videos classified as misleading averaged about 556,000 views, compared with 326,000 for those that were not.

“This is alarming because finance and investment content have a direct impact on a person’s financial stability,” said Legalaes.

Singapore investors enjoy some protection from a regulatory framework governing the provision and promotion of financial advice here. But the Internet recognises no national boundaries.

A Singapore investor scrolling through TikTok, YouTube, Instagram, X or other platforms can easily encounter content produced by someone sitting thousands of kilometres away, operating under entirely different rules – or possibly under no meaningful regulatory supervision at all.

Information or advice?

There is nothing inherently wrong with obtaining financial information online. Indeed, many highly knowledgeable professionals produce excellent educational material.

The danger arises when investors mistake popularity for expertise. A large following is not a professional qualification. Neither are slick production values, an expensive lifestyle or screenshots showing spectacular investment returns.

Investors should also ask how the influencer makes money. Is a particular share, cryptocurrency, trading platform or financial product being discussed because it is genuinely attractive, or because the influencer is being paid to promote it?

The problem is compounded by social media algorithms. Their objective is to maximise engagement, not to determine whether investment advice is suitable, balanced or even correct.

Sensational predictions are therefore capable of travelling much further than cautious analysis.

Research from the Finra Investor Education Foundation, released in April 2026, reinforces the concern.

Social media users and finfluencer followers displayed a striking knowledge-confidence gap: they answered only 42 per cent of questions correctly on an objective investment knowledge test, yet 63 per cent rated their investment knowledge highly.

None of this means investors should ignore social media. But it does mean they should understand what it is: a source of ideas, not a substitute for due diligence.

This creates an important distinction between information and advice.

Before acting on an online recommendation, investors should verify the person’s credentials, check whether there are commercial relationships or conflicts of interest, consult independent sources and understand the downside if the recommendation proves wrong.

The Internet has given investors access to more financial information than ever before. Unfortunately, it has also given unqualified people access to more investors than ever before.

In an age when everyone can have a platform, the old principle of caveat emptor – buyer beware – has arguably never been more important.