Clients scrolling social media for financial advice face a high likelihood of receiving inaccurate information from “finfluencers” who lack relevant credentials, according to a study by fintech licensing consultancy Legalaes.
Researchers found that about 30% of such videos contain misleading information, with video platform giant YouTube generating the highest rate of posts with inaccuracies.
The study also found that about 98% of financial-advice content creators lacked financial credentials that were relevant to the advice they were giving.
“This is alarming because finance and investment content have a direct impact on a person’s financial stability,” the report said. “Viewers are watching, reacting, and frequently acting on the advice offered, which is concerning because the data show nearly three in 10 of these videos are misleading.”
Underlying much of the content was a search for profit, according to the report. Legalaes found many videos failed to disclose conflicts of interest, while at the same time promoting paid products and services.
“Much financial content on social media seems to have been created to induce retail investors into acting, without full transparency on possible adverse consequences, to draw customers into marketing funnels to generate leads and sales,” the report said.
Legalaes examined 1,764 English-language videos posted to YouTube Shorts, Instagram Reels, Facebook Reels and TikTok, collected between July 1 and July 13, tracing the clips back to 1,266 individual so-called “finfluencers.”
Researchers used text analysis of video titles, descriptions, transcripts and creator identifiers to flag misleading claims, rather than manual fact-checking.
Across all four platforms, 29% of videos qualified as misleading and 34.4% offered accurate financial advice, the report found. Legalaes flagged 511 of the 1,764 sampled videos as misleading outright. A smaller slice, 1.9%,, crossed into advice the report called potentially damaging, and 1.1% were flagged as simply inaccurate.
A video could register as both accurate and misleading at once, the report noted, when a clip delivered sound advice but paired it with a risk signal such as a promoted product or a guaranteed-return claim. That overlap helps explain why YouTube posted strong numbers on both ends of the scale at once.
YouTube posted the highest misleading rate of any platform, at 41.8%, compared with 26.8% on Instagram, 23.3% on Facebook and 23% on TikTok, according to the report. The same platform also produced the most accurate content, at 38.3%, ahead of TikTok’s 36.3%, Instagram’s 32% and Facebook’s 28%.
Only 2.2% of the “finfluencers” Legalaes tracked held financial credentials relevant to the advice they were giving, and just 11.7% of videos carried any kind of disclaimer. “Finfluencer” is a portmanteau of “finance” and “influencer.”
Credentialed creators clustered on YouTube as well, making up 5.1% of that platform’s finfluencers, compared with 1.6% on Instagram, 1% on Facebook and 0.7% on TikTok.
For advisors fielding client questions sourced from a video clip, the report’s numbers suggest the platform it came from is a poor proxy for how trustworthy it is. TikTok carried the lowest misleading rate of the four platforms, yet also had the thinnest bench of credentialed creators behind it, at 0.7% of finfluencers. A client citing a TikTok clip and a client citing a YouTube video are working from sources with strikingly similar odds of holding real financial credentials behind them.
Viewers did not gravitate toward the safer content, either. Misleading videos in the sample drew an average of 555,547 views apiece, nearly 70% more than the 326,170-view average for videos the report judged non-misleading. The combined sample logged 692.6 million views and 34.8 million likes across 1,266 individual finfluencers, Legalaes found, meaning the algorithm rewarded the riskier clips rather than filtering them out.
Trading tips and technical analysis carried the worst track record of any content category, with 40.6% of its videos flagged as misleading and 36.4% built around promoting a paid product or service, the report said. YouTube finfluencers overall promoted paid products or services in 32.8% of their videos, a rate that helps explain why the platform’s accuracy numbers and its misleading numbers climbed in tandem rather than trading off against each other.
The report recommended clients vet social media financial content against licensed advisors before acting on advice and laid out an eight-point checklist measured against disclosure standards from the SEC, the U.K.’s Financial Conduct Authority and the European Securities and Markets Authority.
The checklist included such questions as: Does the finfluencer clearly state their credentials? Do they disclose conflicts? Do they refrain from promising specific returns?
“To reiterate, only 2.2% of the finfluencers behind the 1,764 videos we pulled from TikTok, Instagram, YouTube, and Facebook appear to have relevant qualifications. Only 11.7% of the content has disclaimers, 16.6% promote paid products and services, and 29% are patently misleading,” the report said.