SEC Panel Discussion on RIAs’ Mandatory Arbitration Use and Risks of ‘Finfluencers’
The Securities and Exchange Commission’s Investor Advisory Committee is gearing up for its upcoming meeting on December 10th, where they will dive into the hot topics of mandatory arbitration clauses used by RIAs and the impact of social media influencers, also known as “finfluencers,” on young investors.
A group of industry experts, including Kevin Carroll from the Securities Industry and Financial Markets Association and Robin Traxler from the Financial Services Institute, will lead the discussion on the use of mandatory arbitration by RIAs and its effects. They will also compare how these clauses are used by state-registered advisors versus FINRA registered broker-dealers.
In addition, the committee will be exploring ways to better protect investors when they interact with finfluencers. With more and more young investors turning to social media for investment advice, there’s a growing concern about whether these platforms provide enough investor protection.
According to recent findings by the FINRA Investor Education Foundation, a significant number of investors under the age of 35 are relying on social media for investment information. Investors of color are especially likely to use social media, mobile trading apps, and online videos for investment advice. This trend has given rise to a new breed of financial influencers, or “finfluencers,” who have the power to sway others’ financial decisions through social media promotions and recommendations.
The SEC’s Investor Advisory Committee recognizes the changing landscape of investment advice and aims to address these emerging issues to ensure investors are safeguarded in today’s digital age. Stay tuned for more insights from this important meeting as they delve into these critical topics impacting the financial industry.
