Over 40% of the eight million Brits who acted on social media investment content have reported losing money according to BrokerChooser.
The forex broker platform analysed 100 of the most popular trading-related TikTok videos posted by finfluencers and found 93% are potentially misleading or harmful, with only 2% of finfluencers including any form of risk warning or disclaimers. Of those who took financial advice from a social media influencer 42% incurred losses.
Adam Nasli, head analyst at BrokerChooser said: "Without these warnings, even leveraged trading can be portrayed as a low-risk and straightforward route to profit, without any explanation around volatility or the possibility of losing money.
“This raises serious concerns around the level of protection being afforded to social media users, especially given the speed and scale at which online financial content is consumed."
BrokerChooser’s research follows the FCA’s recent ‘Week of Action’, which found 1,267 illegal financial adverts had reached at least 2.3 million UK users.
A Freedom of Information request from BrokerChooser earlier this year revealed a 174% spike in FCA action against finfluencers.
The platform’s latest analysis also found 58% videos were actively promoting trading courses, which it said raisese ethical concerns around disclosure standards and the motivations behind the content being shared. Finfluencers also boast about their earnings in 40% of trading content on TikTok with only 10% of videos providing any explanation of how gains were made.
Nasli said individuals seeking to learn to trade should seek reliable information from verified sources and always practice due diligence.
“Nearly 80% of young people in the UK now trust advice from finfluencers with #FinTok generating around 155K posts on TikTok and #MoneyTok amassing over 3.2 million views.
“But the reality is that 15 to 30-second videos are rarely enough to equip people with the knowledge needed to make informed financial decisions.”
