The effects of online financial endorsements on the investor behaviour of young retail investors

“Online financial influencers have a clear but limited effect on investment decisions”

The digitalisation of financial services in recent years has led to a growing number of Dutch households investing to maintain or improve their wealth. Most investors opt for execution- only services and are therefore responsible for their portfolio and investment decisions. This trend has not gone unnoticed on social media, where online financial influencers (finfluencers) seek to influence those investment decisions. However, the impact of their endorsements on investor behaviour is unknown. We therefore carried out an experimental survey among young retail investors from Tilburg University to shed more light on this matter.

Key Takeaways for the Industry

• Where sub-optimal investment decisions prevail, financial market regulators should supervise finfluencers who claim to be qualified to advise on investment decisions as they increase an investment’s perceived reliability and decrease its perceived riskiness.