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When a finfluencer and/or content creator posts messages on investing, this may cater to a need, as it offers broadly accessible investment information. But finfluencing (i.e. posting and sharing content on investing via social media and websites) also creates risks, and is therefore subject to specific requirements. Animation on the pitfalls of finfluencing: vlogging and blogging about investing. What do you need to keep in mind as a finfluencer?

1. If you're not licensed, never give advice that could be interpreted as personal advice

Giving investment advice means that you tailor the advice to someone’s personal financial situation. Only advisers licensed by the AFM may give investment advice. This licensing is subject to strict conditions, such as with regard to the adviser’s professional competence. It’s good to have a disclaimer stating that you don’t give financial advice, but that’s not enough. As a finfluencer, you must make sure you don’t give any investment advice in practice, so not even in Q&As and in courses and training sessions only open to paying customers.

What constitutes investment advice?

Investment advice is tailored to a client’s personal financial situation. When you give advice, it can easily qualify as investment advice, even by just saying something like: ‘In your situation I would…’

In the applicable European legislation, investment advice is defined as: ‘[...] the provision of personal recommendations to a client, either upon its request or at the initiative of the investment firm, in respect of one or more transactions relating to financial instruments.’

So don’t do this:

Question: I recently had a 10,000 euro windfall. I’m thirty and I’ve cautiously started to invest, mainly in shares in Y and Z. Should I buy more shares in Y?

Answer from More Returns R Us: If I were you, I would switch from shares in Y to shares in X, because you still have such a long investment horizon. Shares in Y are past their peak, and shares in X still have huge potential.

2. Only give objectively substantiated recommendations and be open about your own interest

As a finfluencer, you must observe due care when giving investment recommendations and objectively substantiate your recommendations. If you don’t, investors may be influenced to make an investment decision that is not based on the relevant facts.

What is an investment recommendation?

Unlike investment advice, an investment recommendation is not personal advice, but a general recommendation. Expressing an opinion as to the value or price of a share on social media can easily qualify as an investment recommendation.

In the applicable European legislation, an investment recommendation is defined as: ‘ [...] information recommending or suggesting an investment strategy, explicitly or implicitly, concerning one or several financial instruments or the issuers, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public.’

Observe due care and be open about your interest when making a recommendation.

An investment recommendation is of more general nature than investment advice. Tips on buying or selling particular financial products and analyses are examples of things that qualify as investment recommendations. When you give these recommendations, you must observe due care. That means, among other things, that facts must be clearly distinguished from interpretations and opinions, and that all relevant sources and data must be clearly indicated.

In addition, you must be open about any interest you may have as a finfluencer in making a specific recommendation. That means, for example, that when you give a tip on particular shares, you must disclose that you have an interest in many followers buying or selling these shares, even if you don’t explicitly give an investment recommendation. Be open about the fact that you’re getting paid to recommend certain products. You have a legal obligation to disclose any such interest if it could impair the objectivity of the recommendation.

In addition, the identity of the person making an investment recommendation must be disclosed. This is not properly disclosed when you use anonymous accounts.

So don’t do this:

More Returns R Us: I see that X are going to do an IPO. This will at least triple their share price to $20. Will you seize this opportunity together with me?


3. Be careful about recommending high-risk products

This concerns recommending high-risk products such as forex, turbos, CfDs and cryptos. The AFM has regularly warned about the risks of such products, which are usually not in the interest of (starting) consumer investors, as these products are complicated and often have highly volatile returns. Restrictions have been imposed on the marketing and sale of turbos to protect investors.

At present, cryptos are largely out of scope of the financial supervision, but new legislation is being drafted to address this. The AFM advises caution when it comes to trading in cryptos, due to their high price volatility and the high risk of falling victim to deception, fraud and manipulation. As a finfluencer, you should be transparent about a product’s upside and downside risk.

4. Never do business with financial firms that don't have the required licence

Don’t recommend products from financial firms not allowed to operate in the Netherlands because they do not have the required licence to do so. You can check if a firm has the required licence by looking this up on the AFM website.

Examples of such unlicensed firms include investment firms based outside of the EU (including in ‘tax havens’). These firms often offer trading in high-risk products such as CfDs and forex.

The AFM considers it highly undesirable to refer consumer investors to such unlicensed parties. If things go wrong, a consumer cannot rely on investor protection and the means of recovery available outside the Netherlands usually involve complicated proceedings

5. Don't accept fees for bringing in clients through your referrals

Banks, brokers and other investment firms are prohibited from paying fees to third parties, including finfluencers, on the basis of the number of people that become their clients after being referred to them by these third parties. In addition, restrictions apply to advertising on social media by content distributors.

Ban on inducements

In the Netherlands, a ban on inducements applies to investment firms. This ban on inducements ensures that the (financial) inducements created by commissions don’t harm the interests of clients.
The ban on inducements prohibits investment firms from paying third parties for bringing new clients to them through their referrals. When an investment firm pays you as a finfluencer a fee for bringing in new clients, this qualifies as an inducement if the fee is paid for new clients who have at least started with the onboarding process for opening an investment account.

So don’t do this:

Finfluencer More Returns R Us receives 50 euros from broker So and So for every follower the finfluencer brings to this broker through their channel.

Dutch Advertising Code for advertising on social media

General fees for advertising on behalf of brokers and/or banks are permitted. But this, too, is subject to rules, such as those of the Dutch Advertising Code (Nederlandse Reclame Code, NRC). This is ‘a set of rules formulated by the advertising industry that responsible advertising must meet’.

The Dutch Advertising Code consists of a general section and various special advertising codes. The general section states that advertising must always be recognisable as such and ‘should not be misleading and not be in conflict with the truth’. In addition, advertising ‘should not be needlessly offensive and should not be in conflict with good taste and decency’.

These general rules for advertising are complemented by special advertising codes, which include the Advertising Code for Social Media & Influencer Marketing. Among other things, this Code states that advertising on social media must be clearly recognisable as such and that if a ‘distributor’, in this case an influencer, receives any remuneration in cash or in kind from an advertiser, this must be explicitly stated in the advertisement.

In addition, new rules have been introduced for video uploaders (see here). Following the introduction of a new European Directive and the amendment of the Dutch Media Act (Mediawet), uploaders of videos on social media such as YouTube, TikTok and Instagram (‘video uploaders’) are subject to new rules. As of 1 July 2022, video uploaders must register with the Dutch Media Authority (Commissariaat voor de Media) and comply with the provisions of the Media Act. The purpose of these rules is to give viewers more clarity about commercial messages in online videos and to protect viewers, particularly minors, from harmful content.