RICHMOND, Va. (WRIC) — Virginians rely on social media personalities for new recipes, fashion advice, and now, financial advice and financial opportunities. This trend of investments pushed by financial influencers — or “finfluencers” — is now causing concern for the State Corporation Commission.
According to the State Corporation Commission, many people are now interested in financial investing, but their financial advice often comes from social media rather than traditional sources of financial information, such as brokerage or investment advisory firms.
In particular, financial influencers, or “finfluencers,” are becoming popular on Twitter, YouTube, TikTok and Facebook. These online personalities often promote investment opportunities or financial advice, but may not have a background in financial services, or could even be paid to promote a certain investment.
Ron Thomas, director of the State Corporation Commission’s Division of Securities and Retail Franchising, cautions that just because you see an investment online does not mean it will be a good fit for you and your specific financial situation.
“When it comes to investing, there is no one-size-fits-all approach,” Thomas said. “Instead, individuals should consider whether an investment fits their particular needs. Understand the risks and benefits of any investment and never invest more than you can afford to lose.”
Luckily for consumers, the financial services industry is highly regulated. There are strict rules about disclosing an investment’s performance and risks, and investment promoters are usually required to provide this information to potential investors.
Thomas offers the following tips to Virginians when investigating financial advice online:
- Always use caution when looking into investment opportunities and do your due diligence before investing or taking advice, no matter who is giving you financial advice.
- Be wary of investment opportunities that promise big or guaranteed returns with little or no risk. If it sounds too good to be true, it probably is.
- Try to independently verify who is offering an investment and look for specific details of these offers. Remember that anyone offering investments is obligated to disclose all material facts regarding an investment, and they must disclose the risks associated with each product. If they cannot disclose everything to you — or are unwilling to — this might be a red flag.
- Before you invest, see if the investment — or the person offering it — is legitimate. In Virginia, you can contact the Division at 804-371-9051 or toll-free at 1-800-552-7945, or email SRF_General@scc.virginia.gov to see if an investment is legitimate.