As of: March 9, 2024, 8:12 a.m
By: Lars-Eric Nievelstein
Comments
Press
Split
More and more Germans are making investment decisions through advice from the Internet.
So-called finfluencers provide advice mixed with entertainment.
BaFin warns.
Berlin – 2.1 million Germans between 14 and 29 invested on the stock market in 2022.
Stocks are in – young investors often get advice from so-called finfluencers.
Behind the term are content creators who provide investment advice on social media.
New investors who take their advice take on significant risk.
False advice from Finfluencers – 56 percent result in a loss
One thing first: In practice, anyone can call themselves a “Finfluencer” and upload corresponding videos to YouTube, Instagram or TikTok, for example.
This has already caused resentment within the financial industry because many of these finance-focused entertainers are not trained to provide investment advice.
A study by the Swiss Finance Institute (SFI) showed that less than a third (28 percent) of all so-called finfluencers are qualified to provide advice.
56 percent even give such bad tips that new investors make a loss as a result of this advice.
A smartphone with a description of BaFin on the display.
More and more Germans are making investment decisions through advice from the Internet.
BaFin warns against finfluencers.
© IMAGO / Zoonar
Inexperienced users who look for help with their investments via social media are particularly at risk.
According to the study, it is precisely the 56 percent that social media users prefer to follow.
They often follow these people because they are either better at entertaining or simply look better than the financial advisor next door.
They cover trending topics such as Bitcoin or ETFs, but can also take up classic financial products.
The big problem is that, from a legal perspective, there is hardly any recourse for people who, for example, give financial tips in short videos.
Typically, advisors who advise clients on financial investment products require special permission.
This requirement does not apply to finfluencers, the Federal Financial Supervisory Authority (BaFin) said upon request.
“It does not constitute investment advice requiring authorization if the investment recommendation is announced exclusively via information dissemination channels or to the public.” In this case, it is intended to reach the general public and not individual individuals.
The financial regulator's hands are tied
Finfluencers don't have to fear any negative consequences, even if, for example, they give 100 people so bad advice that they lose part of their savings.
There are already voices in the United States calling for financial influencers to be regulated just like the rest of the financial industry.
This was reported by
Wall Street Online
.
My news
Return transfers of social benefits: This is how much money asylum seekers really transfer to their home countries
Hubertus Heil wants a pension like in Austria: That's why pensioners in the neighboring country read more money
“Anyone who bought an oil or gas heater was lied to” read
Fashion industry under pressure: The next major German fashion chain files for bankruptcy
German and Chinese electric cars in the test: Comparison shows who is ahead - read “These are worlds apart”.
GDL rejects negotiations and gives Deutsche Bahn an ultimatum: read “Smoke Candles Again”.
However, this initial situation changes drastically if a finfluencer gets into a conflict of interest, for example if he or she has positions in a financial instrument and does not disclose them.
Then “this can fundamentally be market manipulation and therefore a criminal offense,” explained a BaFin spokeswoman.
The ban on market manipulation also applies to social media.
BaFin pays attention to such cases and tries to prevent them.
Risks of incorrect advice – loss of capital to total loss
The influence of social media stars on one's own purchasing decisions is nothing new, but financial products are on a completely different dimension than, for example, buying a new nail polish.
Depending on how much an enthusiastic new investor invests, he could lose a significant portion of his savings (with the wrong advice, anyway).
Anything is possible, from capital losses to a total loss of the investment amount.
For this reason, BaFin warns that personal investment decisions should always be carefully considered.
“Information on which investment decisions are based should be questioned and evaluated.” The authority considers it problematic to receive advice from people whose background in the financial sector is difficult or impossible to understand.
The financial regulator gives the following tips regarding Finfluencers:
Investors should review descriptions of coaching and mentoring offerings.
What is the expertise and coaching skills of the person from whom investors seek tips?
Is there a chance of preliminary discussions or testing opportunities?
There is an opportunity for critical questions here.
Investors should compare costs before making a decision - i.e. possible fees of financial influencers.
Beware of psychological tricks.
Consumer advice center issues a warning
The topic of Finfluencers had already reached the consumer advice centers.
These warn against excessive trust in “online financial gurus”.
Critical questions and a background check are particularly important here in order to find out what the respective influencer is advertising with and how they make money with it.
This may also include affiliate links.
This refers to links that lead directly to a product.
The account operator receives an agent commission when the investment is completed.