Finfluencers Make Money Even When You Lose

A recent study revealed that a mere 2.2% of finfluencers surveyed held any verifiable financial qualifications, but their work has already gathered more than 692 million views. That's an attention-grabbing statistic, but it's not the one I think investors should focus on. More importantly, content labeled as deceptive averaged 555,547 views, compared with 326,170 for other videos. Thus, the false material received around 70% greater attention. That tells us something much more useful than the claim that “there are too many unqualified people talking about money online." It tells us what the system is rewarding us for qualified people talking about money online. It tells us what the system is rewarding.

Financial-licensing consultancy Legalaes reviewed more than 1,700 English-language posts across YouTube, TikTok, Instagram, and Facebook and classified 29% of the content as misleading. Around 42% of the YouTube videos examined fell into that category. You can look at those numbers and conclude that qualifications matter, and of course they do to a point, but I would be careful about reducing the issue to licensed versus unlicensed. I have spent more than 35 years around markets and have seen plenty of highly qualified people make terrible investment decisions. Credentials do not eliminate poor judgment. The more profound issue is that the people producing online financial content and the people acting on it are often operating under completely different incentives.

Finfluencers Are Paid for Attention, Not Investment Outcomes

If you manage money professionally, the market eventually forces accountability on you. You buy a stock at $50, and it trades at $28, and sooner or later somebody wants an explanation. Maybe the thesis changed, maybe the valuation was wrong, maybe management disappointed, or maybe you simply made a bad call. Whatever the reason, the position is still there in the portfolio, and somebody can mark it against you. That discipline matters because it ties the quality of the advice, eventually at least, to an economic outcome.

A finfluencer can work under a very different model. A creator can publish a video saying a stock is about to double, attract hundreds of thousands of views, generate advertising income, sell a course, collect subscription revenue, or earn an affiliate fee. The platform gets engagement, the advertiser gets exposure, and the promoter may get a customer. None of those people necessarily need the investment to work. The only person in the chain whose outcome truly depends on the advice being right is the investor who acted on it.

That is why the 70% gap in views matters. It suggests that the most commercially successful financial content may not be the most useful for the person taking the risk. Certainty travels better than nuance. A bold prediction is easier to package than a careful discussion of balance-sheet risk, valuation, and execution. A claim that a stock could triple gives people a reason to stop scrolling. A conclusion that the stock may be interesting at a lower price, but only if a particular catalyst develops over the next two years, is probably better investing but worse content.

Markets are built around uncertainty. Social media is built around removing it as quickly as possible.

That is a dangerous combination.

Why Misleading Finfluencers Can Have an Advantage

Good investing is often boring. Sometimes the best decision is to wait. Occasionally there is no edge. Sometimes a company is interesting, but the valuation is wrong. Sometimes the correct conclusion after several days of work is that you do not want to own the stock at all. None of that is especially useful if your business model depends on publishing something every day and giving your audience a reason to come back.

That is where I think investors should become more skeptical. I am not against financial content online, and some of it is excellent. Social media has made high-quality information far more accessible than it was earlier in my career, and there are thoughtful investors sharing real work in public. The problem begins when the economics of the content starts influencing the nature of the conclusion. If somebody needs a new “big idea” every week, it is worth asking whether the market is really producing that many extraordinary opportunities or whether the publishing schedule is.

The same thinking applies to how the person gets paid. If somebody earns money when you click, subscribe, or buy a course but loses nothing when the investment goes wrong, that does not automatically make the advice bad. It simply tells you that their economics are not the same as yours. Investors should care about that because incentives have a habit of shaping behavior long before they show up in the results.

This is a question I ask constantly when looking at companies. Who is taking the risk? Who gets paid regardless? Who captures the economics if everything works, and who carries the loss if it does not? You often learn more from those questions than you do from the presentation management wants you to see. Finfluencers deserve the same treatment.

Finfluencers Rarely Have to Show the Full Scorecard

The second structural problem is accountability. Portfolio managers carry their mistakes with them. They show up in performance, in drawdowns, and in investor meetings. A bad decision is difficult to make because eventually somebody wants to know why the position is still in the book or why the loss was realized.

Social media is much more forgiving. A creator can make 20 predictions, get three spectacularly right, and then continue talking about those three for months. The other 17 gradually disappear into the feed. There is usually no standardized performance record, no clear position size, and often no indication of whether the person still owns the stock they were promoting. You may not know the entry price, the exit price, or whether they sold before the thesis broke.

That creates an obvious selection problem. The winners stay visible because they make good content. The losers disappear because there is no commercial value in reminding the audience about them.

This problem is not new. Financial television has done versions of it for decades. What has changed is the scale. A bad stock idea once reached thousands of people. Now it can reach hundreds of thousands in a matter of hours, and if the idea is sufficiently dramatic, the algorithm may help it travel even further.

The Legalaes numbers make that worth paying attention to. Misleading content in its sample averaged 555,547 views and 26,780 likes, compared with 326,170 views and 16,878 likes for other content. That is not a marginal difference. It suggests that the market for financial content may be rewarding precisely with the characteristics investors should be most careful around: confidence, simplicity, and certainty.

What Investors Should Ask Finfluencers

The answer is not to stop using social media. The answer is to use it the way you would use any other source of information: by understanding who is on the other side and what their incentives are.

I would want to know whether the creator shows the downside as clearly as the upside, whether they explain what would make them change their mind, and whether they revisit ideas that went wrong. I would want to know whether they own the stock, when they bought it, and whether the idea depends on something measurable rather than a story that can be endlessly moved forward. Most of all, I would want to know how they make money.

That last question is underrated. If somebody is selling access to a trading system, I want to understand why selling the system is a better business than trading it. If somebody seems to discover a once-in-a-generation opportunity every seven days, I want to know whether the frequency of the opportunity is being driven by the market or the content calendar. If every move in the market produces a strong opinion, I want to know whether the person is being paid to be right or simply to keep talking.

At The Edge, we spend a lot of time looking for dislocations where price, expectations, and underlying reality have moved apart. The same framework is useful here because financial content has its own version of valuation. The market is placing value on attention, not necessarily on accuracy. The person consuming that content must decide whether those two things are aligned.

That is also one of the themes I return to in Price Catalysts. Investors tend to spend too much time on the story and not enough on what changes the outcome. Incentives matter because they tell you what people are likely to do when there is money at stake.

The uncomfortable thing about finfluencers is not simply that some of them lack qualifications. It is that the system can reward them before anybody knows whether the advice worked. The creator can get paid attention; the platform can get paid for the engagement, and the advertiser can get paid for the traffic while the investor is still waiting to find out whether the stock was worth owning in the first place.

If misleading influencers really are getting roughly 70% more views, investors should not dismiss that as a quirk of social media. It is a warning about incentives.

And incentives are usually where I start.

On the date of publication, Jim Osman did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.