Only 6 per cent of investors in the UAE trust social media influencers for financial advice, a survey by insurance company Friends Provident International has found.
About 31 per cent consider their family to be the best equipped to offer financial advice, followed by 26 per cent who picked independent financial advisers, 14 per cent chose bank advisers and 13 per cent said friends and peers, according to the survey, which polled 1,005 investors in the UAE in December.
Eight per cent of investors said they did their own research on financial services, while 2 per cent depend on other sources of advice in relation to their financial futures, the survey found.
“[Some] individual investors in the UAE often place far too much weight on the views of social media influencers — who may be completely ignorant or paid to promote a particular idea or product,” said David Kneeshaw, group chief executive of International Financial Group, of which FPI is a part of.
Social media influencers with no financial experience or understanding of the sector have been criticised for promoting products such as cryptocurrencies.
The US Securities and Exchange Commission charged Kim Kardashian in October for promoting on social media a crypto asset security offered and sold by EthereumMax without disclosing what she was paid for the promotion.
Kardashian agreed to settle and pay $1.26 million. She also agreed to not promote any crypto asset securities for three years.
When celebrities or influencers endorse investment opportunities, it doesn’t mean that those investment products are right for all investors, SEC chairman Gary Gensler said at the time.
In 2018, former boxer Floyd Mayweather Jr and music producer DJ Khaled were also accused of violating securities laws by failing to disclose payments they received to promote initial coin offerings on social media.
Many celebrities who endorsed collapsed cryptocurrency exchange FTX.com are now being sued for promoting its services and products.
American football player Tom Brady, model Gisele Bundchen, basketball players Stephen Curry and Shaquille O’Neal and businessman and TV personality Kevin O’Leary are among the celebrity defendants in the FTX case.
Among the respondents to the FPI survey who said influencers were best equipped to offer financial advice, 24 per cent said they would be “extremely confident” in receiving money tips from a social media influencer, while 27 per cent said they would be “somewhat confident” in doing so, the FPI survey found.
Meanwhile, 39 per cent of women said they are more likely to use a family member as a sole source of financial advice. Among male respondents, this figure was 27 per cent.
Similarly, 36 per cent of investors aged between 18 and 24 years said they would rely on family for financial advice, while only 26 per cent of those aged 45 and older said they would do so, the survey found.
Thirty-seven per cent of UAE-based investors with monthly incomes of Dh10,000 ($2,720) or less depend on family members for financial advice, compared with 22 per cent of those with monthly income of Dh25,000 or more, according to the findings.