The Influence of Fin-Fluencers

Teresa Wan

 

 

 

 

 

 

By Teresa Wan, CAMS, CGSS*, Analyst, Compliance

November 10, 2022

In this era of social media mania and digital marketing tactics, nearly everyone has heard the term “influencer.” Influencers are individuals with the ability to motivate or persuade potential buyers of a product or service by promoting or recommending it via social media. For many companies, and fintech start-ups especially, social media marketing and influencer partnerships have become a practical and affordable way to reach their target market as compared to traditional marketing outlets such as television commercials, billboards and print advertisements.

So, what’s a “fin-fluencer”? Much like an influencer, a fin-fluencer is paid to promote a product, but with a key distinction. Fin-fluencers are paid by fintech companies to promote financial products, such as cryptocurrency or a similar investment opportunity that promises a large return for a nominal investment. In addition, many fintech companies target the younger generation, who typically have fewer funds to invest but a stronger interest in making a “quick buck.”

Fin-fluencers make it easy for questionable companies to attract the attention of their target customers, particularly when the fin-fluencer creates the illusion of a so-called “high-flying” lifestyle, while claiming their followers can achieve the same lifestyle through a financial product, such as day trading or cryptocurrencies (e.g., NFTs). Frequently, these are “get rich quick” schemes that can be life-changing in the worst way.

However, not all fin-fluencers are bad or untrustworthy. In fact, fin-fluencers can help their peers increase their financial literacy and improve their well-being. Many have agreed to promote a given financial product or investment opportunity because they truly believe in it, and the partnership is paid by a highly reputable fintech company. As consumers, we must take ownership over the content we choose to consume and trust. It’s up to us to do our own due diligence before taking the plunge. Consider these three tactics to help you identify which financial promotions are deserving of your trust.