Influencer with investment tips often not independent, warns Dutch regulator

Investment experts on social media, known in Dutch by the portmanteau finfluencers, are often lacking in independence and neutrality, warned the Dutch Authority for the Financial Markets (AFM). It is often not clear how they choose to promote investment products and why, when they take part in podcasts and blogs, or post on platforms like Instagram, YouTube and Facebook.

Additionally, most of them have no relevant financial education or work experience, while they are seen as experts by their followers, the AFM concluded after an investigation. The AFM received dozens of reports from consumers who have lost significant amounts of money due to tips from influencers. Their activities will continue to be monitored, the AFM pledged.

Finfluencers are an emerging phenomenon and they make investing accessible to many people, something which the regulator said is a positive development. However, the interests of the investor are not always paramount. Despite their popularity, “finfluencers do not always comply with the rules, for instance because they make ill-considered recommendations and provide investment advice. They also promote risky products and are not always transparent about their own interests and the remuneration they receive.”

The AFM alleged there are few finfluencers who are independent. Many of them clearly have their own interests at heart, but are not transparent about it. Aside from recommendations about risky investment products, some of these supposed experts also offer training courses and their own books for a fee. They also advise followers to open an account with particular investment firms for which they then receive a commission per customer. The AFM emphasizes that the latter is especially forbidden.

The AFM contacted known finfluencers to explicitly point out the applicable rules, and will monitor this group extensively in the coming period. Investment firms have also been made aware that referral fees are not allowed. In the coming period, the AFM will also closely monitor these companies.