“Here’s how I became a millionaire by 30”
Be it through comic strips on Instagram, YouTube videos or articles like the one you are reading right now, finfluencers have been rapidly gaining popularity not just in Singapore but around the world.
They churn out snappy yet highly educational content that fills the knowledge gap in personal finance. After all, who wants to take a four-year degree in finance and sit through boring af lectures where the professors are experts but just can’t seem to teach?Â
While making financial education accessible is a good thing, therein lies a growing problem:
Money advice that is shallow, downplays financial risks, or worse, downright predatory.
How Do Finfluencers Make Money?
To understand this problem, we have to first dive into the question, “How do finfluencers make money?”
Sponsorships
Finfluencers are essentially marketers.
Just like regular influencers, many finfluencers run sponsored content on their channels whereby companies pay them a sum to feature their products.
This isn’t inherently wrong and has been industry practice for quite some time now.
That said, finfluencers run the risk of oversimplification and downplaying the risks associated with financial products.
Let’s say you’re trying to sell a laptop on Carousell that you’ve kept in good condition for years. However, there’s a battery issue that causes the laptop to stay on for only a couple hours.
Naturally, you won’t be blasting, “Selling laptop with battery problem!”. But rather, you may come up with something like “Selling pre-loved Lenovo laptop” and perhaps mention that it has a battery problem that can be fixed somewhere in the description. That’s of course, if you’re even honest to begin with.
The worst of us would probably not even mention the issue and just shout the best features of the laptop.
Similarly, finfluencers that are trying to sell you a product may not give you full disclosure of the risks involved. This could be due to the nature of the platform as well. You can’t go reading out the full terms & conditions of a product on a 15-second TikTok video.
In some cases, finfluencers may even provide misleading information and overhype financial products for the sake of sponsorships.
Products
Another way that finfluencers can make money is through selling their own products. These can come in the form of courses, merchandise, books and more.
Again, there is nothing inherently wrong here. But when there is a lack of regulation and legitimacy, this can turn into bigger problems for the ill-advised.
At the extreme end of the spectrum, there are plenty of financial “gurus” out there with content titles like:
- “Here’s how I made $100,000 in 1 month”
- “This investment course helped my students to trade in just one hour”
- “Many hedge fund managers have this one secret to earn 940% returns”
Then, they’ll try to sell you a course with the promise of getting rich quickly.
In Singapore, there are plenty of influencers that help improve our financial literacy. On the flip side, however, there are just as many who are just trying to make a quick buck from you or encourage you to invest in a product when they don’t know you or the financial situation you are in.
This is exactly why financial advisors in Singapore have to be licensed by the Monetary Authority of Singapore (MAS) before they can give out any financial advice.
How Do I Be Discerning When It Comes To Personal Finance or Investing?
Although there are regulations in place and governments like Australia who have begun cracking down on finfluencers, it is better for us consumers to be able to suss out the good from the bad.
So here are some actionable tips.
Be Aware of How They are ACTUALLY Making Money
First off, do an audit of their channels and content while asking yourself the following questions:
- “Do I understand how they are making money?”
- “Are they transparent when it comes to paid partnerships?”
Once you’ve answered these questions, determine if what they are selling sits well with you.
Understand Their Motives
Secondly, and perhaps most importantly, we need to understand why they are doing what they do.
Educating people with strategies on how to invest in the long term is vastly different from telling you to buy a particular cryptocurrency.
Is It Really That Simple?
Oftentimes, most scams seem too good to be true and this applies to finfluencing too.
Let me break my character a bit to demonstrate what I mean with the following commentaries to some videos I’ve seen. Ahem.
“Here’s how I made $100,000 in a month. Anyone can do it too.” – If anyone can do it, then why aren’t we ALL rich?
“This investment course helped my students to trade in just one hour” – Help lah. I also can execute a trade in five minutes from my moomoo app #notsponsored. This title clearly shows the lack of investing knowledge as it is buying a stock without understanding what they are buying into. Aka gambling.
“Many hedge fund managers have this one secret to earn 940% returns” – Then why aren’t you a hedge fund manager earning big bucks or an ex-hedge fund manager? Why are you selling me a course when you’re already rich?
Afterthoughts
All in all, it is increasingly important for us to be discerning about the information we receive online.
Yes, I know it is a chore to read well-researched content from reputable companies and books. But while short-form content is great for getting us exposed, it is important that we diversify our information sources, read widely and research deep enough to understand personal finance.
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