Social media has transformed itself from a platform where you post vacations and pet videos, to becoming a vital source of information for different aspects of life, including investments.
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Nowadays, many finance influencers have grown their social media empires on Facebook, YouTube, TikTok, and Instagram. These influencers turn to various platforms to post their experiences, views, and knowledge on investments.
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Since information posted by influencers is accessible and easy to understand compared to traditional finance advice, many have turned online to seek finance-related information.
However, experts are warning people who follow this advice. The areas of concern mentioned by experts regarding influencers in the finance niche include the following:
- Propriety of the person providing advice
- Timeliness, factuality, and currency of the information
- Level and understanding of financial literacy, risk appetite, and risk tolerance of the viewers
- Risk of misleading information, as well as potential scams
- The attractiveness of high-risk assets such as crypto assets and meme stocks
In the traditional space, these concerns are easily addressed through consumer protection and corporate laws which state that financial advice must be conducted by licensed parties. Unfortunately, many finance influencers are not licensed and may not even know these requirements.
To mitigate these risks, financial regulators have been educating people to avoid scams by issuing warnings regarding suspicious activities.
Regulators in the AP region have also been taking advantage of the digital space when making guidelines and provisions. For instance, MAS issued the Guidelines on Provision of Digital Advisory Service in October 2018 to give requirements forlicensing, technology risk management, and suitability of advice for digital advisors.
Undoubtedly, the public should be more wary of the information they see online, especially when it comes to the finance industry.
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