Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
The Finfluencer Effect on Canadian Retail Investors
Investor Research | April 23, 2025
Image from OSC Retail Investor and Social Media Study Interface
OSC Study Finds Finfluencers Strongly Impact Retail Investor Decisions, Need for Intervention
The story goes something like this... Maya wasn't looking for investment advice when she jumped on her phone and started scrolling through short videos when one caught her attention. A young finfluencer explained how he built a portfolio by investing a small amount each week. He showed screenshots, made it sound simple, and wrapped the message in personal success. It felt real and by the end of the clip Maya was thinking about following his exact steps. What she didn't realize was how many others were doing the same, by trusting only a short video.
See: OSC Urges Stricter Rules on Gamified Investing Features
Social media platforms have become a significant source of financial information for Canadians. According to the 2024 Canadian Securities Administrators (CSA) Investor Index, 53% of investors use social media for investment information (up 18% since 2020). Not surprisingly, among young investors aged 18 to 24, the figure rises to 82%. And to zoom in even further, 46% of investors report encountering investment opportunities on social media (up 17% from 2020).
On April 22, 2025, the Ontario Securities Commission (OSC) revealed their latest retail investor research, 'Social Media and Retail Investing: The Rise of Finfluencers' in collaboration with The Decision Lab. This post is data-driven look at how trust can turn into risk, and what the OSC likely plans to do about it.
Rise and Impact of Online Financial Advice from the OSC Study
The OSC surveyed 655 Canadian retail investors and found:
- 91% are active on social media
- 35% have made a financial decision based on finfluencer content
- Most commonly used platforms for financial info are YouTube, Reddit, and Instagram
And those who acted on finfluencer advice, the following behaviours increased significantly:
- 12.2 times more likely to have been scammed on social media
- 7.2 times more likely to trust the influencers they follow
- 4.9 times more likely to trade stocks and other investments several times per week
- 3.6 times more likely to believe the content is useful
- 3.2 times more likely to accept losses to potentially generate higher returns
- 2.3 times more likely to have experienced a significant investment loss in the past
- 2.2 times more likely to manage self-service investments through mobile apps
- 3.1 times less likely to work with a licensed financial advisor
- 2.8 times less likely to spend fewer than 60 minutes on social media per day
See: OSC Crypto Trading Platform Compliance Review Findings
The survey results suggest that a growing number of retail investors are relying on social media for online financial advisor, and based on their trust of finfluencers, investment advice found on social media often replaces traditional financial guidance which can lead to increased exposure to risk, especially among younger investors who are online frequently.
OSC's Experiment to Learn More
To better understand how social media and finfluencer content affects financial decisions, the Ontario Securities Commission ran an online study with 1,465 Canadians who use social media. Each person was randomly placed into different groups to see how different types of posts might influence what they would choose to buy in a simulated investment setting. Participants managed a simulated $10,000 portfolio and were exposed to promotional finance content modelled after real social media posts. Here's the rub:
- 38% of participants who saw the content purchased the promoted asset
- Only 8% of the control group (who saw no content) made the same choice
- 29% of non-investors acted on the post, while 21% of investors did too
These above results confirmed that exposure to financial content on social media can significantly impact investment decisions, especially among those with less experience.
OSC Tested Mitigation Strategies
The OSC ran tests to look at which behavioural interventions could be used to reduce the influence of influencer content including:
See: Report Insights: DIY Investors in Canada on the Rise
- Disclosure - informing viewers that the post may be promotional
- Prebunking - providing warning notifications before exposure to potential misinformation
- Inoculation - presenting a weaker version of misleading content followed by a correction
- Nudges - prompting users to consider the accuracy of information before acting
The results found that all of the above methods helped reduce the number of participants who purchased the promoted assets but none completely eliminated the influence of the original content.
OSC Policy Recommendations
The OSC's report suggests that the regulator supports continuation of regulatory oversight and targeted interventions to protect retail investors from finfluencer content, especially since social media is now integral to the distribution and/or access of financial advisor. In addition to the various Canadian regulatory guidelines below, the report confirms that authorities should consider additional measures to address these concerns that are now backed by evidence.
- CSA Staff Notice 31-325 – Marketing Practices of Portfolio Managers
- CSA Staff Notice 33-321 – Cyber Security and Social Media
- CSA Staff Notice 51-356 – Problematic Promotional Activities by Issuers
- CSA and CIRO Staff Notice 21-330 – Guidance for Crypto-Trading Platforms: Requirements Relating to Advertising, Marketing and Social Media Use
- OSC Staff Notice 33-755 – Summary Report for Dealers, Advisers and Investment Fund Managers
Conclusion
While some finfluencers provide valuable insights for investors, others can provide misleading or harmful advice. The OSC's findings are a cause for concern for regulators who are evaluating further oversight measures to protect retail investors from the potential risks associated with unregulated financial advice on social media platforms (or by finfluencers). Learn more about the OSC's study about the Rise of Finfluencers and Social Media and Retail investing.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
 |  |  |
|---|---|---|
 |  |  |
Leave a Reply