Finfluencers are popping up everywhere, who protects the investor?
‘On social media, anyone can pose as a financial expert, with all the potential risks and consequences that entails,’ says former corporate law student Nannerl Kok. She wrote her thesis on the phenomenon of ‘finfluencers.’
Where did the inspiration for your thesis topic come from?
‘Financial influencers—also known as finfluencers—are popping up like mushrooms. Sometimes these are Dutch celebrities who give their followers financial recommendations on social media. But also ‘ordinary’ Dutch people baptize themselves as financial advisors.
‘For example, an acquaintance of my colleague ‘suddenly’ gave investment recommendations on Instagram. My colleague and I both work in financial law and wondered if this could ‘just happen’ and what the legal implications were. When I had to come up with a thesis topic, I immediately wanted to find out.’
What is your thesis about?
‘I researched whether the activities of finfluencers fall under the Dutch Financial Supervision Act. If so, that activity comes under the control of regulators. That way, investors are protected, which is important. After all, the revenue model of finfluencers does not rely on the quality of their recommendations.
‘A finfluencer gets a commission for the number of likes on an Instagram post or views of a YouTube video. This may encourage a person to want to stand out from others in order to gain as many followers as possible. As a result, a finfluencer could potentially give risky and unconventional recommendations, resulting in investors making the wrong financial decisions.’
What is the outcome of your research?
‘In my thesis, I considered the possibility of (supervisory) enforcement of finfluencers and came to the conclusion that this is not possible in all cases. Legislation and regulators are lagging behind new technical developments and the growth of social media. This particularly relates to finfluencers that provide recommendations on crypto, such as Bitcoin.
‘On social media, anyone can pose as a financial expert, with all the potential risks and consequences that that entails. Therefore, I advise European and national legislators to catch up as soon as possible. Financial law exists for a reason: it has to protect investors.’
What do you yourself think of finfluencers?
‘I think the growth of finfluencers on online platforms is hugely risky. People who have little to no knowledge about investing can present themselves as financial experts on social media. Rapper Boef is one such example. He offers courses and provides young people with financial recommendations so they—like him—can become financially independent.
‘Young people see him as a role model and are more likely to follow his recommendations as a result. That such a person could potentially encourage non-professional investors—people like you and me—and young people to make the wrong financial choices, I find worrisome.’
Do you have a tip for upcoming thesis writers?
‘If you choose a current topic, do realize that you are dependent on current developments. This can cause you to suddenly have to change directions while writing your thesis. This can be stressful, but there is always light at the end of the tunnel. It is quite normal to encounter certain obstacles while writing your thesis. The trick is to overcome these obstacles calmly.’
A literature review, experimenting in the lab, or getting into the swing of things with SPSS? Tilburg University students write the most diverse theses. In the Master’s Thesis section, Univers highlights one every month.
Author: Nannerl Kok
Title: Li(j)ken Finfluencers te ontkomen aan toezichtrechtelijke handhaving? (Liking Finfluencers escape regulatory enforcement, or does it seem that way?)
Supervisor: Dr. G.J.H. van der Sangen, LLM
Translated by Language Center, Riet Bettonviel