Finfluencers, Fraud Risk, and Why Experienced Financial Advice Still Matters

Financial advice has never been easier to find.

Open YouTube, Instagram, TikTok, Reddit or X, and within minutes you can encounter investment recommendations, market predictions, tax strategies and promises of financial independence. Some creators provide useful financial education. Others may lack the qualifications, context or incentives needed to provide advice that is appropriate for the people watching.

A new research brief from the FINRA Investor Education Foundation highlights an important challenge: Investors who rely on social media may be highly engaged, yet they may also face a significant gap between how much they believe they know and how much they objectively understand.

That gap can create costly consequences.

The FINRA Foundation analyzed data from its 2021 and 2024 National Financial Capability Study Investor Surveys. The 2024 survey included 2,861 respondents who owned investments outside of retirement accounts.

According to the research:

29% of investors used social media or message boards to help make investment decisions.
26% made investment decisions based on recommendations from social media personalities.
Among investors ages 18 to 34, 60% used social media for investment decisions and 61% followed recommendations from social media personalities.
YouTube was the most commonly cited platform for investment information, followed by Reddit, Facebook, LinkedIn and Instagram.

These findings do not mean that all financial content on social media is unreliable. Social media can make financial education more accessible, introduce investors to important concepts and encourage people to become more involved with their finances.

The challenge is distinguishing general education from personalized advice and credible information from persuasive marketing.

The Knowledge-Confidence Gap

One of the most significant findings in the FINRA Foundation research brief involved the difference between objective investment knowledge and investors’ confidence in their own knowledge.

Respondents completed a 10-question investment quiz covering areas such as risk, returns, margin, short selling, fees and taxes.

Social media users answered an average of 42% of the questions correctly, compared with 47% for investors who did not use social media. Finfluencer followers answered 41% correctly, compared with 47% for non-followers.

Despite the lower objective scores, social media users and finfluencer followers were more confident in their knowledge:

63% of social media users rated their investment knowledge highly, compared with 53% of non-users.
66% of finfluencer followers rated their knowledge highly, compared with 52% of non-followers.

This does not prove that social media causes overconfidence. The survey identifies relationships between investor characteristics and behaviors, not necessarily cause and effect. However, the findings illustrate a risk that experienced investors and financial planners encounter frequently: Knowing enough to feel confident is not always the same as knowing enough to understand the potential consequences of a decision.

Why Overconfidence Can Be Dangerous

A confident investor may be more likely to act quickly, concentrate a portfolio in a popular investment or dismiss risks that do not fit the prevailing narrative.

Social media can intensify these tendencies because investment content is often designed to attract attention rather than communicate nuance. A short video may explain the potential return of a strategy without adequately discussing:

The possibility of loss
Tax consequences
Liquidity restrictions
Concentration risk
Time-horizon considerations
Transaction costs and ongoing fees
How the strategy interacts with the rest of an investor’s financial life

An investment recommendation can be factually accurate while still being inappropriate for a particular investor.

A concentrated technology stock may be suitable for one person and unnecessarily risky for another. A Roth conversion may create long-term tax benefits in one situation and an avoidable tax bill in another. Claiming Social Security early may be reasonable for one household but significantly reduce lifetime income for another.

The missing ingredient is often not more information. It is context.

The FINRA Foundation also found meaningful differences in reported fraud exposure and losses.

Among respondents who reported being targeted by investment fraud:

68% of social media users said they lost money, compared with 29% of non-users.
69% of finfluencer followers said they lost money, compared with 26% of non-followers.

The survey also presented respondents with a hypothetical investment promising a guaranteed, risk-free 25% annual return for five years. Such language contains several classic fraud warning signs, including a guarantee, the absence of risk and an unusually high promised return.

Social media users and finfluencer followers were substantially more likely to say they would consider the opportunity.

These findings do not suggest that every person who uses social media will become a fraud victim. They do reinforce the importance of slowing down whenever an investment is promoted with urgency, exclusivity or promises that appear too good to be true.

More Research Does Not Always Mean Better Decisions

Interestingly, the social media investors in the study were not necessarily careless.

Social media users consulted an average of 7.6 information sources, compared with 4.0 sources for non-users. They were also more likely to report checking a financial professional’s registration or license. BrokerCheck by FINRA

This is an important distinction. Investors may consume a large amount of information and still have difficulty evaluating its quality.

Ten videos repeating the same popular narrative do not represent ten independent sources. An online creator citing another creator does not provide the same verification as reviewing regulatory filings, tax rules, investment disclosures or research from a qualified source.

Effective due diligence involves more than gathering information. It requires understanding incentives, qualifications, assumptions, conflicts of interest and how the recommendation applies to your circumstances.

What Fee-Only Fiduciary Advice Adds

A qualified financial planner should provide more than investment ideas.

The adviser’s role is to evaluate how a decision fits within a broader financial plan that may include retirement income, taxes, insurance, estate planning, employee benefits, real estate, business interests and family goals.

An investment adviser’s fiduciary obligation includes duties of care and loyalty, as described in the Securities and Exchange Commission’s interpretation of the standard of conduct for investment advisers. A fiduciary adviser is expected to place the client’s interests ahead of the adviser’s interests, provide advice appropriate to the client’s circumstances and disclose material conflicts.

A fee-only compensation structure generally means the advisory firm is compensated directly by clients rather than receiving commissions for selling financial products. The National Association of Personal Financial Advisors provides additional information about the fee-only model.

Fee-only compensation does not eliminate every conflict, and fiduciary status does not guarantee investment performance or prevent losses. Investors should still understand an adviser’s services, fees, disciplinary history, investment philosophy and potential conflicts.

However, working with an adviser who is not paid to recommend a particular product may help keep the focus on the client’s overall plan rather than on completing a transaction.

Experience Matters Because Financial Decisions Are Connected

For many people, retirement happens once. Selling a business may happen once. Exercising stock options, completing a 1031 exchange, inheriting substantial assets or deciding when to claim Social Security may be unfamiliar decisions with lasting consequences.

An experienced planner may have helped many households work through similar situations.

That experience does not create certainty. It can, however, help identify questions that are easy to overlook:

What happens to the plan if the investment declines?
What tax liability could the transaction create?
How much liquidity will remain afterward?
Is the decision consistent with the household’s time horizon?
Does the strategy create too much exposure to one company, sector or economic outcome?
How could the decision affect retirement income, Medicare premiums or estate planning?
What alternatives should be considered before acting?

Good financial advice is not simply about predicting which investment will perform best. It is about making informed decisions when the future is uncertain.

A Practical Process for Evaluating Financial Advice Online

Before acting on an investment recommendation, consider the following questions:

Who is providing the information?
Review the person’s education, professional credentials, employment history and regulatory record. Investors can research brokerage professionals through FINRA BrokerCheck and investment advisers through the SEC’s Investment Adviser Public Disclosure database. CFP® professionals can also be verified through the CFP Board.

How is the person compensated?
Determine whether the creator is receiving advertising revenue, referral compensation, commissions, sponsorship payments or compensation from the company or investment being discussed.

Are the risks explained as clearly as the potential rewards?
Be cautious when content emphasizes upside while minimizing taxes, fees, volatility, liquidity limitations or the possibility of loss.

Does the recommendation fit your financial plan?
A strategy that makes sense in isolation may conflict with your income needs, tax situation, existing investments or risk capacity.

Are you being pressured to act quickly?
Urgency, secrecy, guaranteed returns and claims of limited access are common fraud warning signs.

Social media can be a useful starting point. It can introduce new concepts, encourage people to ask better questions and make financial education more approachable.

It should not automatically be treated as personalized financial advice.

Before making a major financial decision, consider discussing the opportunity with an experienced, fee-only fiduciary adviser who can evaluate it in the context of your complete financial life. The value of that relationship is not that an adviser knows exactly what markets will do next. No one does.

The value is having a disciplined process, an informed second opinion and a plan designed around your goals rather than the priorities of an algorithm.

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About Rigden Capital Strategies

Rigden Capital Strategies was founded on a simple belief: financial advice should be personal, transparent, and centered around your goals—not built on generic models or product-driven sales. With decades of combined industry experience, we’ve developed a process grounded in three core values: value, integrity, and progress.

As a fee-only fiduciary, we provide personalized, goals-based wealth planning services designed to adapt with your life. Our services include investment management, retirement and tax planning, and estate coordination. We use a mix of active and passive strategies to help clients navigate market changes with clarity and confidence.

We believe in building real relationships and delivering clear, actionable strategies—focused on long-term planning and aligned with your objectives.

Your goals, our strategies. Together, let’s make your goals happen.

Important Disclosure: This article is provided for educational and informational purposes only and should not be considered individualized investment, tax or legal advice. The FINRA Foundation study reports survey relationships and does not establish that social media use causes fraud losses, lower knowledge or other outcomes. All investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Adviser registration, professional credentials or fiduciary status do not guarantee investment performance or eliminate all conflicts of interest. Consult qualified financial, tax and legal professionals regarding your individual circumstances.

Social Media Is Now a Major Source of Investment Information