ESMA Issues Guidance to Finfluencers on Disclosure, Risk, and Investment Advice

The European Securities and Markets Authority (ESMA) has published a factsheet outlining expectations for so-called "finfluencers" who promote financial products or services on social media, warning that such activity can expose both audiences and content creators to significant financial and legal risks.

In the document, ESMA stresses that promoting investments is fundamentally different from advertising consumer goods. Posts that are misleading or reckless can result in financial harm to followers, and responsibility does not depend on whether the individual is a licensed finance professional. According to ESMA, anyone posting about financial products "could be held legally responsible for any adverse consumer outcome."

A key focus of the guidance is transparency around incentives. ESMA says influencers who receive payments, gifts, or other benefits for promotion must disclose this clearly and prominently, using terms such as "Ad," "Paid partnership," or "Sponsored," or a platform's built-in advertising label. Disclosure is also required where the influencer already holds the investment or could benefit if others buy it.

The authority highlighted several high-risk products frequently discussed online, including contracts for difference, forex, futures, certain crowdfunding initiatives, and volatile cryptocurrencies. These instruments, ESMA noted, can carry the risk of losing all invested capital. Posts discussing such products should be "true, fair, clear and not misleading," and should clearly distinguish between factual information and personal opinion.

ESMA also cautioned against promotional language that emphasizes rewards while downplaying risks. Statements designed to create urgency or promise quick profits, such as "get rich fast," were singled out as particularly problematic. "If it sounds too good to be true, it probably is," the factsheet states, adding that promoting unauthorised platforms could expose influencers to being linked to scams.

On the issue of recommendations, ESMA drew attention to the boundary between general commentary and regulated activity. Telling people what to invest in, predicting price movements, or promoting specific investment strategies can amount to investment advice or an investment recommendation under EU rules, activities that require authorisation from a national regulator. The authority noted that disclaimers such as "this is not investment advice" do not remove these obligations.

Finally, ESMA warned against overstating expertise. While a finance qualification is not required to post online, the regulator said presenting opinions as expert guidance without sufficient understanding can cause real harm to followers and lead to consequences for the influencer.

Summarising its position, ESMA urged finfluencers to prioritise honesty and clarity, avoid misleading content or unlicensed advice, and think carefully before posting. "If in doubt, don't post," the factsheet concludes.