As of: March 7, 2024, 9:00 p.m
By: Laura Hindelang
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“Finfluencers” give tips on stocks, retirement planning and cryptocurrency on social media.
Many of them should not be believed.
Earn a fortune with a few smart investments – financial influencers, also known as “Finfluencers”, want to know how it works.
Their recommendations are in demand, as a survey by
Finanztip
shows: According to this, more than half of Germans get advice from financial influencers.
But how trustworthy are the people who call themselves experts?
“Finfluencer” boom since the end of the pandemic
A joint
study by the HHL Leipzig Graduate School of Management and the consulting agency Paradots
has put the German “finfluencer” landscape in figures for the first time.
Of the 357 accounts examined, more than half have only been active on Instagram since 2020, according to the study.
“The Finfluencer boom correlates clearly with the growth in the number of shareholders among the younger generation,” explains Henning Zülch, holder of the Chair of Accounting, Auditing and Controlling at HHL.
“Here, too, there was a sharp increase in 2020.
Many young investors discovered the topic for themselves during the Corona period.”
There is a lot of interest in the tips from “Finfluencers”, but their expertise is not always there.
© Westend61/Imago
According to the
German Stock Institute,
4.1 million people under the age of 39 invested in the stock market in 2023.
In 2017, for example, there were only 905,000.
So it's no wonder that the topic is becoming increasingly popular on social media.
The influencers examined in the
HHL study
collectively have more than ten million followers.
Most profiles have fewer than 10,000 followers and are therefore considered nano or micro influencers.
The largest accounts, on the other hand, are followed by up to 750,000 people.
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The big influencers have more than doubled their followers in the last few years.
“The recipe for success of 'finfluencers' is that they convey financial content in an authentic, personal and entertaining way.
This clearly distinguishes them from other players and also the traditional media,” says Eloy Barrantes, CEO of the consulting agency Paradots in the
HHL study
.
The main topics of the accounts are:
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Analyzes of individual stocks (25 percent)
Finance (11 percent)
Asset accumulation and retirement provision (10 percent)
Financial education (10 percent)
Dividend stocks (8 percent)
According to the study, the “finfluencers” include both professional experts with in-depth background knowledge and black sheep who spread dubious investment tips.
A study by the Swiss Finance Institute
provides more precise figures
.
More than half of influencer tips are harmful
Accordingly, only 28 percent of all financial influencers are qualified and competent.
16 percent are unskilled, meaning they have no appropriate training.
The tips from the remaining 56 percent were assessed as harmful in the study.
This means that anyone who had followed the advice of the “Finfluencers” would have even lost money.
As an example, Bild
cites
the well-known “finfluencer” Flo Pharrell, an alleged millionaire who lives in Dubai and hides his face behind a mask.
He offered his followers to copy his purchases.
As a result, many reported high losses that they had suffered as a result.
Quite a few of the self-proclaimed “financial experts” had already worked as influencers, explains an article on
Deutschlandfunk
.
Because over time they realized that you can earn even faster in the financial world, they are now producing articles on money topics.
How to recognize a reputable “Finfluencer”.
This often involves cryptocurrencies, and the influencers usually provide the corresponding link to the crypto exchange.
If users register via the link and make a purchase, the influencer receives a commission.
In order to urge followers to invest, some create the fear of missing out on something, says
Deutschlandfunk
's article : "If you don't buy now, you're missing out on the opportunity of a lifetime."
“Caution is always advised when influencers advertise flimsy financial products or even overpriced seminars with big promises,” warns Andreas Hackethal, professor of finance at Goethe University in Frankfurt, in an interview with
Bild
.
Susanne Althoff, financial expert at n-tv,
lists how you can recognize reputable “finfluencers”
based on the following points:
The “Finfluencer” not only explains opportunities, but also risks.
The “Finfluencer” should be able to explain exactly why the product (e.g. company shares) in which he is investing is doing well and why he thinks it is a useful recommendation.
The “Finfluencer” should be able to demonstrate specialist knowledge, for example through certificates.
The “Finfluencer” has a complete imprint on his site and cites sources for his statements.
The “Finfluencer” is independent, so it does not advertise products.
According to the financial expert, only certified investment advisors are allowed to make real purchase recommendations in Germany.
But if you want to get informative advice on social media, you should pay attention to the points above - and also follow several reputable financial influencers in order to get multiple perspectives on different investment strategies.