The risk of investing on a whim among young people

Social media has become one of the main sources of financial information for young people. Platforms such as TikTok, Instagram and YouTube feature thousands of short videos—reels—in which content creators explain investment strategies, recommend stocks and promise formulas for achieving financial independence in a short period of time. However, behind this accessible and aspirational language lies, in many cases, a narrative of quick success that minimises risks and distorts the reality of the markets.

This phenomenon is of particular concern to the Spanish National Securities Market Commission (CNMV), which has been actively monitoring the activity of finfluencers since 2022. The supervisor warns that many of these recommendations may conceal conflicts of interest, such as commissions for attracting new customers to investment platforms or the sale of courses that promise unrealistic returns.

The most recent analyses by Funcas identify three particularly vulnerable groups: young people looking for quick profits who get their information exclusively from social media; people with low or unstable incomes, who are more likely to take excessive risks; and users with low financial literacy, who tend to overestimate their ability to understand complex products.

Given this scenario, the CNMV has recently clarified when the activity of finfluencers can be considered customer acquisition, a function reserved solely for authorised entities. On this point, Cristina Villasante, partner at ECIJA, points out that: "If there is financial compensation, the content must be clearly identified as advertising. Creators can disseminate advertising messages, but they cannot solicit customers or interact with them by answering queries to induce investment."

This distinction is key from a legal point of view, as failure to comply with these obligations can result in significant penalties, reaching up to €500,000 for individuals and €1 million for legal entities.

The concern is not limited to the regulator. The OCU has recently reported allegedly misleading practices by online financial training companies, focusing on urgent messages, promises of quick results and possible violations of the right of withdrawal. All of this reinforces the idea that the line between disclosure, advertising and investment recommendations is becoming increasingly blurred in the digital environment.

From a legal perspective, experts agree that what matters is not how the finfluencer defines themselves, but the content and actual purpose of the message. If a publication encourages investment in certain securities or financial products, it must comply with the requirements of clarity, objectivity and transparency demanded by the regulations, differentiating facts from opinions and avoiding omitting relevant information that could be misleading. In this regard, Villasante stresses the need for extreme diligence when the target audience includes minors or young people with little investment experience.

Meanwhile, the role of large digital platforms remains a subject of debate. The CNMV recently sanctioned X for not blocking advertisements from alleged financial scams and denounced the lack of cooperation from some social networks, in contrast to the commitments made by others such as Google and Meta to verify the authorisation of advertisers.

In a context where one in three young people between the ages of 18 and 30 has invested in the last year and 15% admit to having been the victim of a recent scam, the combination of effective supervision, platform responsibility and transparent financial education becomes essential. Otherwise, many will continue to make investment decisions "on a whim", without distinguishing between objective information and covert advertising, with potentially serious consequences for their personal finances.

Read the full article published in El País here.