For example, Kim Kardashian recently agreed to pay a $1.26 million settlement with the SEC for promoting crypto security EMAX on her Instagram account without disclosing she was paid $250,000 to do so. EMAX has fallen by more than 99 percent since peaking in May 2021. This case is a reminder that, when celebrities or influencers endorse investment opportunities, it doesn’t mean those investment products are right for all investors or that they are even legitimate.

Additionally, access to licensed and certified financial advisors is often out of reach for many. Marginalized and underrepresented communities of color often prefer people who understand and respect the nuances of their culture, so finfluencers fill in the gap as they are often better able to understand the needs of those clients. As financial exploitation continues to be a growing concern, particularly with young adults and elderly investors, consumers need to know how to spot red flags and how to protect themselves when seeking financial advice on social media platforms and apps.

A finfluencer is a person who, by virtue of their popularity or cultural status, can influence the financial decision-making process of others through promotions or recommendations on social media. They may influence potential buyers by publishing posts or videos to their social media accounts, often stylized to be entertaining so that the post or video will be shared with other potential buyers. While there is nothing new about marketers paying for celebrity endorsements, what is different is that such breezy and hyper-emotional endorsements are being made in what is otherwise a very regulated industry with stringent rules about performance claims and disclosure of potential conflicts of interest.

There are several differences between finfluencers and licensed investment advisors, but here are a few things to consider when evaluating the source of online financial advice.