Beyond the hype: Building financial resilience in the age of digital noise

In today’s modern era of cutting-edge technologies and Artificial Intelligence (AI), financial advice can be just a click away.

Undoubtedly, this has led to the emergence of innovative digital platforms that make the flow of information easy, and investment services and products more competitive and inclusive for consumers. Unfortunately, this has also created digital noise that makes it difficult for young investors to distinguish sound financial advice from misleading recommendations or even outright scams. As the adage goes, “If it sounds too good to be true, it probably is.”

The purpose of this article is to advocate for impactful financial literacy initiatives to help the younger generation become better educated, avoid the noise of biased advice, reach smarter financial decisions, and ultimately achieve financial resilience. This is aligned with the main focus of this year’s Global Money Week (“GMW”) campaign that started on 17 March, 2025 with the theme "Think before you follow, wise money tomorrow."

The Digital Noise: Social Media, Finfluencers and AI

According to a CySEC survey undertaken in 2022, nearly one in three (31%) investors had made investment decisions based on recommendations from financial influencers on social media platforms such as TikTok, YouTube, X and Instagram - the so-called “finfluencers”. Recommendations from finfluencers can cover just about anything ranging from tips to start your own business to online savings schemes, direct investments in stocks, ETFs, cryptos, CFDs and other financial products.

Who is classified as a finfluencer and what is their motivation?

A finfluencer is an individual with significant visibility on social media and large numbers of followers, often in the thousands or even millions, who uses their audience to earn significant sums of money from companies whose products and services he or she actively promotes. Finfluencers can be very creative and produce engaging content to explain financial concepts and strategies to the public in a simple and effective way, hence their popularity with younger people. They get remunerated via traffic they create for their published content (the platform algos), clicks on advertisement links (click bait), and direct payments from companies whose products and services they promote. Monetising their online content is their primary motivation and not necessarily the welfare of their followers.

What are the risks with finfluencers?

According to an IOSCO report produced in 2024, the main risks related to finfluencers include recommending unsuitable and risky products to unsuspecting investors by unregulated individuals and firms. Other risks covered in the said report include the potential for misleading content, the lack of proper disclosures, and the possibility for fraud and scams.

Is AI exacerbating the risks?

Recent AI developments have made it easier, cheaper, and faster to create high-quality video content on social media, including fake videos. The fact that AI designed videos accommodate the mimicking of the face and voice of just about everyone is deeply concerning. Unfortunately, it has become quite common for such videos to falsely but in a very convincing manner portray politicians, including US Presidents, or celebrities like Elon Musk, or even legendary investors such as Warren Buffet to give their “expert” advice on social media.

Is every finfluencer a fraud?

To be fair, not all finfluencers are frauds. Some may be duly educated, professionally certified and experienced in matters related to investments, and licensed by a competent authority to provide advice. For example, CFA Charter holders undergo a rigorous process of professional training and testing in matters related to asset valuations and portfolio management. More importantly, they must adhere to high ethical standards and abide by all pertinent regulatory requirements in their dealings with clients. Such requirements provide minimum safeguards to investors and potential investors that such qualified and duly authorised professionals providing financial advice have a clear obligation to always act in their clients’ best interests.

Building Financial Resilience: Strategies for Young People

Financial literacy is the most important pillar for achieving financial resilience. Understanding basic financial concepts such as budgeting, saving, managing risks and investing for the long term can empower young people to develop a robust roadmap for achieving their financial objectives. Resources for financial education include books, websites, and workshops. In Cyprus, several organisations such as the CySEC, the CBC, the CFA Society Cyprus and the two largest state universities offer financial literacy seminars.

Developing critical thinking skills is crucial for navigating the digital financial landscape. Young people should use common sense and scrutinise any information they receive by cross checking with reliable sources such as government websites and reputable financial news and data channels. It’s important to remember that there is no magic formula for getting rich quickly, and if anyone had discovered such a formula, they surely wouldn’t share it on social media. One should always filter any investment ideas they hear by doing their own research, and ensuring they understand and feel comfortable with undertaking any investment actions.

Managing emotional biases is also important. Strategies for managing emotions and avoiding impulsive decisions include setting clear goals, creating a budget, and sticking to a disciplined investment strategy.

Finally, seeking professional advice can provide valuable guidance. While finfluencers may offer general advice addressed to a broad audience, licensed professionals have a fiduciary duty to provide tailored recommendations that consider an individual's unique circumstances and goals.

The rapidly evolving digital landscape presents both financial opportunities and challenges for the younger generation. AI tools, social media platforms, and finfluencers create noise that complicates financial decision-making. However, by developing critical thinking skills, embracing financial literacy, managing emotional biases, and seeking professional advice, young people can draw their own financial blueprint and ultimately achieve financial resilience. The theme of Global Money Week 2025, "Think Before You Follow, Wise Money Tomorrow," underscores the importance of exercising such diligence, discipline and common sense before jumping into any investments, to achieve long-term financial success.

*Spyros Ierides, CFA, Chartered MCSI, writing on behalf of the CFA Society Cyprus