In the age of digital everything, the way people learn about investing has radically changed. Gone are the days when financial advice came solely from certified professionals in suits behind desk phones. Today, platforms like YouTube, TikTok, Instagram, and Reddit are buzzing with investment tips, crypto hot takes, and “get-rich-quick” schemes — often coming from self-proclaimed experts with no formal credentials. While the democratization of financial education is a positive shift, there’s a growing risk that many retail investors are unknowingly following unregulated advice that could cost them much more than a bad investment.
The Influence of Financial Influencers
In 2023, over 50% of Gen Z and Millennials in the U.S. admitted they take financial advice from social media — a trend mirrored across Europe and increasingly visible in Italy too. A TikTok video offering 30-second investment “hacks” can easily reach millions of viewers. These influencers often promote ideas with high confidence and slick visuals, giving their audience a false sense of trust. But here’s the problem: many of them are not regulated, meaning they don’t face the same rules as licensed financial advisors. That lack of accountability opens the door to misinformation, hype, and in some cases, outright scams.
Take, for instance, the boom in meme stocks and crypto tokens like Dogecoin or Shiba Inu. While some early investors profited, many jumped in too late, driven by online FOMO (fear of missing out), only to lose substantial amounts of money. These events underscore how herd mentality and unfiltered advice can lead to dangerous outcomes.
Why Regulation Matters
Licensed financial advisors and wealth managers are bound by legal standards and ethical obligations. In the European Union, professionals must adhere to MiFID II regulations, ensuring that they understand your risk profile, financial situation, and long-term goals before recommending investments. In contrast, an anonymous Redditor or Instagram account offering investment ideas is under no such obligation.
Unregulated advice also often lacks nuance. An influencer might say, “I bought Tesla and it doubled — you should too.” But they won’t tell you about their portfolio allocation, time horizon, or whether that trade fit their overall risk profile. Following this kind of advice without context is like driving with someone else’s glasses — the world might look clearer to them, but you could crash.
Common Red Flags to Watch For
While not all online content is harmful, it’s crucial to develop a critical eye. Be cautious of:
- Promises of guaranteed returns (“make 20% a month with this strategy”).
- Pushy promotion of specific assets or platforms, often tied to affiliate commissions.
- Influencers lacking transparency about their own investments.
- Overuse of hype words like “exploding stock,” “moonshot,” or “hidden gem.”
The Cost of Bad Advice
It’s hard to quantify exactly how much money is lost due to poor financial advice from unregulated sources. However, the UK Financial Conduct Authority (FCA) estimates that social media scams cost British consumers over £250 million annually. Globally, investment scams are among the top financial frauds reported, often exploiting economic uncertainty and people’s hopes for quick returns.
Navigating Online Advice Safely
This doesn’t mean you should ignore online financial content altogether. In fact, many creators offer valuable insights, education, and market commentary. The key is to treat this content as inspiration, not instruction.
Cross-check any investment advice with reputable sources. Use official government or regulatory sites like CONSOB in Italy, or the European Securities and Markets Authority (ESMA), to verify legitimacy. If something sounds too good to be true, it usually is.
Moreover, consider using online content as a supplement — not a substitute — for building your financial literacy. Learn the basics, question bold claims, and when possible, consult with a qualified advisor before making significant moves with your money.
Think Critically, Invest Wisely
In a world of viral content and trending hashtags, your financial future shouldn’t be decided by algorithms or likes. As a retail investor, especially if you’re just starting out, protecting your capital is as important as growing it. That means taking the time to filter signal from noise, and making choices that align with your personal goals, not someone else’s hype reel. Because when the likes fade, the consequences of poor decisions stick around — and they’re all yours to deal with.
