The Red Line of Financial Communication

From the taverns of Amsterdam to social networks: a history of financial communication…

From the very origins of financial markets, communication among investors has played a fundamental role in shaping investment decisions.

As early as the seventeenth century, when the Amsterdam Stock Exchange was taking its first steps, merchants and traders would gather in taverns and coffee houses to discuss trading companies, voyages to the Indies and the movement of prices. A few decades later, at Jonathan's Coffee House in London — widely regarded as the cradle of the London Stock Exchange — brokers concluded deals and exchanged information over a cup of tea. The history of the Milan Stock Exchange also offers a curious episode: during the renovation works on the Palazzo della Borsa between 1887 and 1890, trading sessions were temporarily hosted in the foyer of Teatro alla Scala.

Today, those meeting places have gone digital. The conversations that once took place in coffee houses or on trading floors now unfold on YouTube, TikTok, Instagram, podcasts and digital platforms. The medium has changed; the human need to exchange views, share experiences and seek information has not.

It is probably for this reason that the phenomenon of so-called finfluencers has attracted growing attention from supervisory authorities. In recent months, studies, consultations and warnings regarding the risks associated with the dissemination of financial content through social media have multiplied. A recent study conducted in the United Kingdom highlighted numerous shortcomings in the quality of content published on the major digital platforms, while CONSOB has dedicated an extensive research paper to the subject of digital financial communication.

The finfluencer debate: real risks and alarmist tones

The debate, however, risks at times adopting an excessively alarmist tone.

The first observation — perhaps a contrarian one — is that the growing proliferation of content dedicated to personal finance represents, on balance, a positive development.

A country in which thousands of people discuss inflation, pensions, savings, financial markets and financial planning is a country in which interest in financial literacy is growing. It would be difficult to argue that only authorised intermediaries should be permitted to speak about finance, just as no one would contemplate restricting health communication to physicians alone or legal commentary to lawyers.

Naturally, this does not mean that every piece of content published on social media is accurate or useful. As with any form of communication, high-quality content coexists alongside superficial, imprecise, or even misleading messages. However, the solution cannot be to discourage financial education. Rather, it is necessary to identify clearly the point at which information transforms into something different.

Where financial education ends and investment advice begins

This is a boundary that does not depend on the credentials of the communicator, but on the nature of the communication itself. It is a line that separates the dissemination of information from the ability to steer an investment decision.

Explaining how an ETF works, outlining the characteristics of a certificate, or describing the mechanics of a mutual fund constitutes financial education. A different case arises when a piece of content, taking a specific financial instrument as an example, emphasises its return potential through particularly favourable simulations, back-tests constructed on optimistic assumptions, or selective comparisons with other products, thereby inducing the audience to regard it as a preferable investment choice.

It may occur, for instance, that a video analyses an investment certificate in detail, highlighting returns reconstructed through particularly favourable back-tests. Formally, this might constitute informational content; in substance, the message is potentially capable of steering investor decisions, particularly when the content is sponsored by the issuer.

In such cases, the distinction between information and promotion becomes extremely fine.

The issue, therefore, does not concern so much the figure of the finfluencer as the nature of the message. It is not sufficient to ask who is communicating; one must ask what is being communicated, with what purpose, and what effect that message is reasonably likely to produce on investor behaviour.

The regulatory framework: MiFID, MAR and the rules already in place

In this regard, it is often argued that finfluencers operate in a kind of regulatory vacuum. This is not the case.

When an influencer acts on behalf of an authorised intermediary, the MiFID rules on marketing communications and intermediary liability apply.

When investment recommendations are made, the provisions of the Market Abuse Regulation (MAR) apply — provisions that are directed not exclusively at authorised intermediaries but, more broadly, at anyone who disseminates investment recommendations through any means of communication. The issue, therefore, is not so much a matter of creating new rules as of correctly identifying the nature of the message.

Sponsorships and transparency of commercial relationships

There is also a further aspect that deserves particular attention.

Increasingly, content published on social media is the result of commercial arrangements between influencers, issuers, and financial intermediaries. This is an entirely legitimate phenomenon, provided that the audience is placed in a position to understand its nature immediately. From this standpoint, I fully share CONSOB's approach: sponsorships must be clearly identifiable and immediately apparent. Transparency regarding commercial relationships is an essential condition for each investor to be able to critically evaluate the content received.

The next frontier: artificial intelligence and the perception of…

It should also be noted that, while we are debating finfluencers, the focus of the discussion is already shifting.

In the years ahead, a growing number of investors will turn not to a flesh-and-blood influencer, but to an artificial intelligence-based assistant to obtain explanations, product comparisons or guidance on possible investment choices.

The regulatory question will remain exactly the same. Where does financial information end and where does an investment recommendation begin?

The difference is that, whereas the finfluencer speaks to a community of followers, an artificial intelligence system engages individually with each user, creating a natural perception of personalisation. The real challenge for regulators will likely be not to distinguish between human and artificial communication, but to define when information — even if ostensibly general — is perceived by the investor as a recommendation tailored to their personal circumstances.

Four centuries ago, investors met in the coffee houses of Amsterdam and London. Today they meet on social networks and, tomorrow, they will in all likelihood engage with artificial intelligence systems. Technologies change rapidly. What remains unchanged, however, is the need to distinguish between those who contribute to raising financial literacy and those who steer — directly or indirectly — investment decisions. It is on this boundary, more than on the figure of the finfluencer, that the regulatory debate should focus.