New research from Queen Mary University of London confirms what many compliance officers have suspected: almost 90% of social media posts from financial influencers are low quality. That's not industry cynicism. That's academic data.
What the Research Found
The study examined content from so-called "finfluencers" — individuals who post investment-related content on social media platforms. The findings are stark. Nine out of ten posts fail basic quality standards.
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This matters for regulated firms. When a broker-dealer or investment adviser compensates an influencer, or even when an associated person engages with one, the firm takes on supervisory responsibility for that content under existing advertising rules.
The Regulatory Framework Already Exists
No one’s waiting on new rules here. The framework’s already in place:
- SEC Rule 206(4)-1 under the Advisers Act governs RIA advertising, including testimonials and endorsements
- FINRA Rule 2210 covers broker-dealer communications with the public, including social media
- SEC Marketing Rule amendments from 2020 specifically address influencer arrangements and compensation disclosure
The research doesn't create new obligations. It validates why those obligations exist.
What This Means Operationally
If your firm uses influencers — or if associated persons collaborate with them — you need documented due diligence. Here's what that looks like:
Content Review Before Posting
Any compensated endorsement requires pre-approval under most firms' supervisory procedures. The 90% low-quality finding means your review process needs teeth. Don't rubber-stamp influencer content.
Disclosure Requirements
Compensation arrangements must be disclosed clearly. This applies whether the influencer is paid cash, receives free services, or gets any other benefit. The SEC has been explicit about this since the Marketing Rule amendments.
Documentation of Diligence
Examiners will ask how you vetted the influencer. They'll want to see the process. A handshake agreement won’t cut it. Examiners want paperwork, not promises.
Ongoing Monitoring
Your responsibility doesn't end at the first post. If an influencer goes off-script or makes claims your firm can't support, you own that problem.
The Practical Reality
Most firms don't have dedicated resources to monitor finfluencer content in real time. That's understandable. But the regulatory expectation doesn't adjust for firm size.
The solution isn't to avoid social media entirely. It's to be deliberate about who represents your firm, directly or indirectly, and to document your supervisory process thoroughly.
Bottom Line
This research quantifies what regulators have been warning about for years. Social media content about investments is frequently unreliable, misleading, or simply wrong. If your firm has any connection to that content, your supervisory procedures need to reflect the risk.
Review your written supervisory procedures for influencer and social media provisions. If they're thin, now is the time to strengthen them.
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Key Takeaways
Does this research trigger any new compliance requirements?
No. The research validates existing concerns but doesn't create new rules. Your obligations under SEC Rule 206(4)-1 and FINRA Rule 2210 remain unchanged. However, it reinforces why robust supervision of influencer relationships is essential.
What counts as a compensated endorsement requiring disclosure?
Under the SEC Marketing Rule, compensation includes cash, free products or services, directed brokerage, or any other economic benefit. If the influencer receives anything of value in connection with their recommendation, that arrangement must be disclosed.
How should we document our influencer due diligence?
Maintain records of how you vetted the influencer, what content you reviewed and approved, the compensation arrangement, and your ongoing monitoring process. Examiners expect to see a supervisory trail, not just the final posts.
The content in this blog is for informational purposes only and does not constitute legal advice, regulatory guidance, or an offer to sell or solicit securities. GiGCXOs is not a law firm. Compliance program requirements vary based on business model, customer base, and regulatory classification.