Despite its many indispensable benefits, the internet has become a powerful engine for misinformation and manipulation. As we discussed recently, financial services regulators are now beginning to match tough rhetoric with decisive action.

Regulated financial services companies need to be especially scrupulous about how they communicate and how their brands are represented. Even third parties marketing your services on your behalf, or appearing to do so, can pose a significant reputational risk, especially when the connection between online influencers and brokers is opaque or poorly disclosed.

As consumer magazine Which? warns its readers “many finfluencers avoid regulated activity and instead sell education and training courses or materials that purport to tell you how to pick your own investments to build wealth.”

In other cases, finfluencers operate as affiliates or commercial partners of brokerage platforms, earning fees or commissions for directing followers to specific services, potentially blurring the line between independent education and incentivised promotion.

The information gap

While we need to be cautious about online promotions, it would be a mistake to treat the whole digital ecosystem as inherently problematic.

A report issued by Canada’s Securities and Investment Management Association (SIMA) highlights some of the well-documented negative effects these finfluencers can have but also, crucially, outlines potential benefits.

For instance, many – in fact, most – financial influencers surveyed gave bad investment advice, with 56% of finfluencers studied “categorised as ‘anti-skilled,’ meaning their investment recommendations led to negative abnormal returns (negative alpha).”

That’s especially troublesome because, the report found, finfluencers are used predominantly by people with a brokerage account (44% of respondents) and often followed by younger investors who have a high level of confidence in their trading experience.   

But the report also demonstrates that young, active and engaged investors are actively seeking out quality information and practical content.

Investing in the future

The SIMA report, which is aimed at professional financial advisors, suggests that accredited advisors still have a critical role.  After all, “the value proposition of a registered advisor is defined not by reach, but by accountability and comprehensive expertise.”

It’s a lesson that extends to financial services more broadly. Beyond the question of regulation and reputation, brokers and other trading companies will appreciate that investors are increasingly hungry for clear, precise, transparent and genuinely useful information.

While it may not always be appropriate to provide financial advice, firms can still add real value by investing in high-quality, educational content that builds trust, enhances financial literacy and clearly distinguishes credible insight from noise.

While a high-impact digital acquisition programme is often essential for getting to market and accelerating growth, brokers must also prioritise sustainable growth and customer retention. Striking the right balance between these objectives is key to shaping a digital footprint (and a sales, marketing and service strategy) that is both competitive and durable.

All opinions, news, research, analysis, prices or other information is provided as general market commentary and not as investment advice and all potential results discussed are not guaranteed to be achieved. The information may have been derived from publicly available sources, company reports, personal research, or surveys. Past performance is not indicative of future performance. Trading carries risk of capital loss. Service available to professional clients only.