Finfluencers Are Losing You Money—Here’s the Proof

Utrecht University delivers a brutal reality check—most finfluencers are underperforming the market. In fact, their investment advice on stocks yields 1% less than the market average, and when it comes to cryptocurrency, it’s even worse—2% less.

The study, published in the economics journal ESB, analyzed over 400 investment recommendations made by 21 major finfluencers between 2018 and 2022. The influencers, each boasting at least 1,000 followers on platforms like YouTube and Instagram, had reach extending to over a million people in the Netherlands, primarily young investors. Some even had follower counts ranging from 10,000 to 50,000. But despite their online clout, their financial recommendations turned out to be significantly weaker than those made by traditional financial analysts.

The Truth Behind Finfluencer Hype

According to the researchers, the primary issue is that many finfluencers are not actually basing their recommendations on solid financial analysis. Instead, they appear to be driven by the fear of missing out (FOMO) or simply echoing the latest trends. In many cases, they were found to be pushing stocks and cryptocurrencies just as professional analysts were becoming bearish on those assets. In other words, they were recommending investments at exactly the wrong time.

Even worse, some finfluencers could be engaging in pump-and-dump schemes—manipulating their followers into buying assets they already own, only to sell them once the price surges. While this may benefit the influencer, it leaves their audience holding the bag when prices inevitably crash.

The Dangers of Social Media Investment Advice

Social media has democratized access to financial information, but not all information is equal. Unlike licensed financial analysts who rely on deep research and historical trends, finfluencers often operate with little oversight. Their advice is not regulated, and their incentives may not align with those of their followers.

A significant portion of finfluencers make money through sponsorships, affiliate marketing, or even direct payments from financial products they promote. This means their primary motivation may not be to provide sound financial guidance, but rather to drive engagement and profit from their influence.

What Should Investors Do Instead?

The Utrecht researchers strongly advise against relying on finfluencers for serious financial decisions. Instead, they recommend turning to more credible sources of financial information, such as:

• Traditional financial advisors who are regulated and have a fiduciary duty to act in their clients’ best interests.
• Institutional investment research, which provides in-depth market analysis based on data, not hype.
• Learning fundamental investment principles from reputable sources rather than chasing the latest viral trends.

Conclusion: Beware of the Social Media Hype

While finfluencers can make investing seem exciting and accessible, the numbers don’t lie—their advice is costing people money. Whether it’s stocks or crypto, following their recommendations has led to worse returns than simply investing in the market average. If you’re serious about growing your wealth, it’s time to tune out the noise and seek financial wisdom from reliable, data-driven sources rather than social media personalities looking for clicks