Finfluencing

Abstract

Finfluencer (noun): a person who, by virtue of their popular or cultural status, has the ability to influence the decision-making process of others through promotions or recommendations on social media. Now more than ever, consumers look to the internet for advice and guidance on all aspects of their life, including money and financial management. In fact, Generation Z (Gen Z or Gen Zers) are almost five times more likely to get financial advice from social media platforms compared to people aged forty-one and over. This increasing reliance on social media platforms has created the modern finfluencer and given them enormous power. Currently, the market size for finfluencers is $104 billion —yes, billion—with some individual finfluencers making more than $500,000 per year. With this large amount of power, finfluencers should act ethically, responsibly, and in accordance with federal laws. To that end, this Article creates a best practice guide, encouraging finfluencers to follow best practices drawn from early forms of financial influencing, namely financial journalism and media, and from federal law.

This Article proceeds in four parts. Part I explores the history and evolution of financial influencing: beginning with financial journalism in print media in the 1500s, evolving into television and radio media, and eventually spreading into the internet. Part II explains the modern finfluencer, who they are how, how they work, what power they hold, and the danger they carry. It examines the Federal Trade Comission's (FTC) 2019 Guideline “Disclosures 101 for Social Media Influencers,” and the Investment Advisers Act of 1940 (IAA), and argues that neither does a particularly good job at regulating finfluencers. Nonetheless, Part IV uses both the FTC guidelines and the IAA, along with the best practices established by financial journalism in print, television, and radio media, to create a best practice guide for finfluencers.

Keywords: finfluencer, finluencing, financial influencer, financial influencing, financial advice, financial influence, social media financial influencers, social media financial advice

JEL Classification: K20, K29, K30