Could Finfluencers’ emojis be financial advice?

Canadian regulators say yes. It depends on the context and the influence.

What is a financial influencer?

Former Senior Vice President at TD Waterhouse Canada Inc. and former CTV Chief Financial Commentator Pattie Lovett-Reid empowers your wealth and well-being with finance wisdom. Former product quality engineer turned financial educator and coach Eduek Brooks tells you how to invest your first $1,000 in the stock market, even with zero investing experience. Canadian in a T-Shirt YouTuber Adrian Bar teaches about investing, taxes and money saving tips.

You can listen to them on YouTube and podcasts, follow them on Instagram and other social media platforms and even work with them to influence their followers through the messenger they trust.

Their backgrounds and their advice vary but they all have one thing in common: they create content related to finance on social media. They are financial influencers, or finfluencers.

According to a 2024 survey from the Canadian Securities Administrators (CSA), Canada’s equivalent of the U.S” Securities and Exchange Commission (SEC), retail investors are relying less on advisors for investing information: 70% did in 2016 and 43% did in 2024, although financial advisors do remain the first source, slightly ahead of banks and financial institutions (36% vs. 26% in 2016), Family and friends come third at 29%, before 27% for the media. Regulators are the last source of information among investors.

The CSA defines influencers as:

Someone who creates online content (such as through various social media platforms, online blogs, or message boards) to offer advice, tips, and guidance on how to manage money, invest, and achieve financial goals. They may create content on other topics as well as investing.

The appeal of finfluencers

More than half of investors (53%) use at least one social media site (from a list proposed in the survey) for investment advise, up from 35% in 2020:

• YouTube: 29%
• Facebook: 24%
• Instagram: 17%

Among Canadians 18-25, 82% use social media for investing, led by YouTube, Instagram and TikTok.

Another survey by the Ontario securities Commission found that 91% of Canadian retail investors are active on social media, with YouTube (34%), Reddit (22%) and Instagram being the most popular platforms.

“35% of respondents reported making a financial decision based on advice from a finfluencer.” OSC survey

The reasons for using finfluencers

Financial topics can be complex and financial education in Canadian schools remain limited, as is education about news.

Advisors can be out of reach for investors with a limited amount of money or time. It can also be intimidating.

Enter influencers. Self-reported reasons for listening to influencers include

• Ease of access
• Simplicity
• Cost-free
• Informative content.

How finfluencers impact investors’ behavior

The OSC conducted an “experiement” to undertsanad how influencers impact investors’ behavior. Here are some findings:

• Influencers do impact trading behavior
• Financial social media content led 21% of investors to buy promoted assets (and 29% of non-investors)

Which communications strategies reduce social media influence?

• Prebunking
• Inoculation
• Nudges

While finfluencers can help educate retail investors, the quality of advice varies widely.

Enters regulators guidance.

What is Canadian securities regulators guidance?

The CSA, together with the Canadian Investment Regulatory Organization (CIRO), published a guidance on December 11 on the application of securities legislation to finfluencer activity.

Whom does the guidance apply to?

Finfluencers

“Securities laws can extend to finfluencer activity regardless of whether it is conducted through video, online postings, text messages, television, print or other means, and regardless of whether the finfluencer is a real person or is a computer-generated digital avatar” (also referred to as a digital influencer).

If someone creates an AI agent or uses AI to provide advice about investing, to promote investments or anything else that is subject to securities laws, that person may be held responsible for what the AI does as if they themselves had done it directly.

Registrants and issuers who work with them

This means if you partner with an influencer, you’re also targeted by this guidance.

It’s about the context in which you’re providing the content and whether people exposed to your content might reasonably be influenced.

Remember:

Promoting securities for payment from an issuer is subject to securities laws, including disclosure requirements.

Key points of the guidance

• Depending on exactly what you say and do, you may be engaged in activity regulated by securities laws.
• If you offer advice about investing you may be required to become registered with securities regulators.
• Influencer activity may also be subject to other securities laws, particularly if the activities involve marketing investments or related services or providing a link to a trading platform for implementing copy trading.
• a “general advice” exemption from this registration requirement that many finfluencers will be able to rely on.
• Finfluencers who rely on the “general advice” exemption must provide clear and timely disclosure when they have financial or other interests in securities that they talk about.
• Finfluencer activity may also be subject to other securities laws, particularly if the activities involve marketing investments or related services or providing a link to a trading platform for implementing copy trading.
• The consequences of acting outside of securities laws can be serious, including significant fines, disgorgement of profits or a ban on working in the securities industry.

Regulation requirements

Registration as an advisor or dealer

You must register if your advice or trading is for a business purpose

• Your advice includes offering an opinion about the merits of investing in a business or its securities or making a recommendation about an investment in a business or its securities.
• “Any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of” a sale of a security” is considered trading.
• Registration requirement cannot be avoided by simply making a disclaimer asserting you are not providing advice or trading securities.

Where do you register?

• With the securities regulator in each province and territory where the advice can be seen, heard or read, or trading services accessed (for internet-based communications, it likely means all of the provinces and territories).

Exemption for general advice

• If your advice is not tailored to the needs of an individual receiving the advice, it is considered a general advice and the finfluencer is not required to register as an adviser
• You are still required to disclose  your financial and other interests, like indirect incentives.

No exemption for trading activity

• Marketing and promotion
• Referral arrangement

If a finfluencer receives any form of payment to market the services of a registered dealer or registered adviser they may be entering into a “referral arrangement” subject to requirements set out in securities law.

Marketing and promotion

Referral arrangement

If a finfluencer receives any form of payment to market or promote investing in particular securities, or undertake “investor relations” or similar activities, they may be found to be acting on behalf of an issuer or registrant..

Promote investing in securities

If a finfluencer receives any form of payment to market or promote investing in particular securities, or undertake “investor relations” or similar activities, they may be found to be acting on behalf of an issuer or registrant.

How to make a required disclosure

What to do

• Disclosure must be clear and conspicuous.
• Sufficient information must be provided
• Disclosure should appear where the audience connects
• Be prominent (hard to miss)

What not to do

• A general disclosure won’t work.
  • Ex: “I may have a financial interest in some of the securities that I mention”
• Put the disclosure at the end of a long video, document or post
• Force the audience to make additional clicks to read, watch, or hear
• Use confusing or unclear terms.

Working with finfluencers

Registered firms

Registered firms working with finfluencers could also fall within the requirements and guidance related to referral arrangements. Firms should keep in mind:

• They may be held responsible for statements made on their behalf.
• They are opening another door to reputational damage
• Could find itself facilitating “registerable activity” by unregistered parties

What to do

• Due diligence on the finfluencer
• Esrablish written agreements
• Ensure the finfluencer is able to discuss the firm and its products in a way that is:
  • Fair
  • Balanced
  • Substantiated
• Monitor finfluencers’ statement on an ongoing basis
• Train employees regarding any direct involvement with finfluencers
• Identifying, disclosing and addressing any material conflicts of interest in the best interest of the client.

Securities issuers

• Adhere to high-quality disclosure practices across all communication channels in order to prevent unbalanced, misleading or selective disclosure.
• Social media content should be consistent with the issuer’s continuous disclosure record.
• Ensure the finfluencer is aware of the issuer’s obligations under securities law regarding public communications.

What to do

Implement controls to ensure that:

• The content is factual, balanced, does not contain any misrepresentations about the issuer’s business or affairs, even if unintended, and does not create a misleading appearance of trading activity or contribute to an artificial price for a security;
• Forward looking information is not selectively disclosed;
• Payment for the promotional relationship is prominently disclosed;
• The finfluencer does not engage in fraudulent or deceptive practices.

Y Perspective AI tip: Create finfluencer onboarding processes and AI workflows that embed this guidance.