People who share information about investing on social media do not always follow the rules. This is the conclusion of the supervisory authority of the Netherlands Authority for the Financial Markets (AFM) in an initial exploratory study into these so-called finfluencers. It looked at a group of 150 financial influencers.
“They meet an information need regarding the investment theme,” says Teun van der Velden, manager of market integrity and enforcement at the AFM. According to him, there is a particular need for this among a growing group of young, starting investors. “We as AFM do not think that the fact that information is being released is wrong at all. We only applaud that.” But many things go wrong, he says.
Not transparent
For example, influencers are not always neutral and transparent, says the regulator. For example, they may make recommendations in which they themselves have an interest, for example to open an account with an investment firm for which they receive a fee per client. That is not allowed, says the supervisor.
Also, most influencers do not have relevant financial training and they sometimes promote very risky and complex financial products. Followers can then lose a lot of money. The regulator has received dozens of reports of this.
It is not allowed to provide financial advice without a license from the AFM. Many influencers use the disclaimer that what they say is not advice, but according to the regulator they sometimes do give it on social media during question and answer sessions. The AFM considers it investment advice if influencers discuss someone’s personal situation, for example by saying “in your case I would…”.
Not all wrong
The group of influencers is diverse, says Van der Velden. “In terms of professionalism, but also in terms of number of followers.” Influencers aren’t all wrong either, says the regulator.
The regulator does not name specific influencers who do or do not comply with the rules, because that is supervisory confidential information. In general, it’s important for followers to be aware that the interests of influencers don’t always match your own, says Van der Velden.
If the same rules are still being violated after a few months, action can be taken, the AFM says. Fines for specific influencers are then an option.
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