FINRA Foundation Research on Social Media Investors and Fraud Risk

FINRA News Releases

Published April 2nd, 2026

Detected April 7th, 2026

Summary

The FINRA Investor Education Foundation released research examining retail investors who use social media and follow finfluencers. The study, based on the 2024 National Financial Capability Study, found that social media is successfully engaging younger and previously underrepresented investors, but these investors exhibit elevated fraud risk. Among social media users targeted for fraud, 68-69% lost money versus 26-29% for non-users, despite answering only 42% of investment knowledge questions correctly while 63% rated their knowledge as high.

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What changed

FINRA Foundation published research findings on social media-informed retail investors. The study found that 60% of investors aged 18-34 use social media for investment decisions versus 9% of those 55+, and 61% of younger investors made decisions based on finfluencer recommendations. Social media users answered 42% of objective investment knowledge questions correctly yet 63% rated their subjective knowledge as high, indicating a significant knowledge-confidence gap. Among those targeted for fraud, 68% of social media users and 69% of finfluencer followers lost money, compared to 29% and 26% of non-users/non-followers respectively.

Compliance officers at broker-dealers and investment advisers should note that social media is increasingly influencing retail investment decisions, particularly among younger demographics, yet these investors face elevated fraud exposure. Firms should consider enhanced investor education efforts addressing social media risks, verifying finfluencer credentials, and recognizing that self-assessed investing knowledge may not correlate with actual competency. The research highlights opportunities for targeted outreach to at-risk investor populations and reinforces the importance of background checks on financial professionals.

What to do next

Monitor for related investor protection initiatives from FINRA
Consider enhanced fraud awareness materials for social media-active retail investor clients
Review internal procedures for educating investors on social media investment risks

Source document (simplified)

News Release

April 02, 2026

[email protected]

New FINRA Foundation Research Examines the Characteristics, Behaviors and Outcomes of Retail Investors Who Use Social Media

Younger Investors Turn to Finfluencers to Inform Decisions, but Face Knowledge Gaps and Elevated Fraud Risk

WASHINGTON—The FINRA Investor Education Foundation (FINRA Foundation) released today new research, Finfluencer Followers and Social Media Scrollers: The Profile, Patterns, and Pitfalls of Social-Media-Informed Retail Investors.

The research examines retail investors who use social media and follow finfluencers to inform their investment decisions. The findings, drawn from the Investor Survey component of the 2024 National Financial Capability Study (NFCS), reveal that while social media is successfully engaging previously underrepresented market participants, these investors may also face elevated fraud risk due to knowledge gaps.

"This research shows that social media is a significant resource for investors, but it comes with both potential benefits and costs," said Gerri Walsh, FINRA Foundation President. "These platforms are drawing in investors who might otherwise remain on the sidelines, providing educational content and fostering community. However, the fact that many of these same investors exhibit low objectively-assessed investing knowledge, high self-rated confidence in their investing knowledge and are vulnerable to investment fraud raises serious concerns. This research underscores the critical need for more targeted financial education efforts to help financial consumers find unbiased information, better assess risk and spot red flags of financial fraud."

Key Findings:

Demographics: Social media users and finfluencer followers were predominantly younger (60% of investors aged 18-34 use social media vs. 9% of those 55 or older; 61% aged 18 – 34 made an investment decision based on recommendations from a social media personality vs. 6% of those 55 or older), male, had lower portfolio values and were more likely to be a person of color than those who do not use social media or finfluencers to inform their decisions. Nearly half reported not identifying as "typical investors."
Knowledge-Confidence Gap: Social media users and finfluencer followers often exhibited overconfidence, with more rating their subjective knowledge high while scoring low on objective investment knowledge tests compared non-users or non-followers. Social media users and finfluencer followers answered an average of 42% questions correctly on an objective investment knowledge quiz, yet 63% rated their investment knowledge as high.
Fraud Risk: Social media users and finfluencer followers reported substantially higher fraud exposure and victimization. Among those who reported being targeted for fraud, 68% of social media users and 69% of finfluencer followers reported losing money to fraud (compared to 29% and 26% for non-users and non-followers, respectively).
Information-Seeking: Social media users consulted an average of 7.6 information sources versus 4.0 for non-users and were more likely to check the background of a financial professional (36% vs. 14%).
Non-Monetary Motives: Social media users reported significantly stronger motivations beyond profit motives for investing, including entertainment (59% vs. 18% for non-users), social activity (59% vs.11%) and supporting personal values (66% vs. 31%).

About the FINRA Investor Education Foundation

The FINRA Investor Education Foundation supports innovative research and educational projects that empower Americans with the knowledge, skills and tools to make sound financial decisions throughout their lives. For more information about FINRA Foundation research and education initiatives, visit www.finrafoundation.org.

About FINRA

FINRA is a not-for-profit organization dedicated to investor protection and market integrity. FINRA regulates one critical part of the securities industry—member brokerage firms doing business in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.